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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
1 Mihir Ashok Sampat Assessment Year-2012-13 आयकर अपीलीय अिधकरण “बी” "ायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI "ी श""जीत दे,"ाियक सद" एवं "ी मनोज कुमारअ"वाल, लेखा सद" के सम"। BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा"रण वष" / Assessment Year: 2012-13) Mihir Ashok Sampat ACIT –Circle 17(2) बनाम/ 274/279, Room no.18 Aaykar Bhavan, M.K. Road 2nd Floor, pearl Arcade, Chheda Mansion Mumbai-400 020. Vs. Narshi Natha Street, Mumbai-400 009. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AEQPS 8335 A (अपीलाथ"/Appellant) (""थ" / Respondent) : अपीलाथ"कीओरसे/ Appellant by : Shri Rashmikant C. Modi & Ms. Ketki Rajeshirke – Ld. ARs ""थ"कीओरसे/Respondent by : Ms. Kavita P. Kaushik- Ld.DR सुनवाईकीतारीख/ : 23/09/2019 Date of Hearing घोषणाकीतारीख / : 23/09/2019 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No.CIT(A)- 2 Mihir Ashok Sampat Assessment Year-2012-13 28/IT-50/ACIT-17(2)/2015-16 dated 17/10/2016 on following grounds of appeal: - “The Grounds of Appeal stated herein below are without prejudice to each other: - 1) The learned Commissioner of Income Tax (Appeals) erred in confirming disallowance of interest of Rs. 33,96,886/- paid to bank. 2) The learned Commissioner of Income Tax (Appeals) erred in holding that income earned by way of interest as a rule be treated as income from other sources. The provisions of the Income Tax Act provide that the interest received from the firm by a partner to be assessed under the head "Profit & Gains of Business". 3) The learned Commissioner of Income Tax (Appeals) erred in rejecting the claim of the appellant made during the assessment proceedings for considering interest expenditure against interest received from partnership firm where he is a partner. 4) The learned Commissioner of Income Tax (Appeals) ought to have considered appellant's claim of interest paid to the bank against income received from two partnership firms (where the appellant is partner and computed under the head "Profit and Gains of Business".
We have heard and considered the rival submissions. 2.1 Facts as emanating from record are that the assessee being resident individual was assessed for impugned AY u/s 143(3) on 27/02/2015 wherein the income of the assessee was determined at Rs.54.81 Lacs after certain adjustment as against returned income of Rs.20.84 Lacs filed by the assessee on 29/03/2014. 2.2 During assessment proceedings, it transpired that the assessee earned interest on Bank Fixed Deposit for Rs.92,800/- against which the assessee claimed interest expenditure of Rs.33,96,886/- and eventually reflected loss of Rs.33,04,086/- under the head Income from other Sources. In defense, the assessee submitted that it obtained mortgage loan on a property and invested the same in two partnership firms and earned interest 3 Mihir Ashok Sampat Assessment Year-2012-13 thereupon for Rs.19.06 Lacs, which was Business Income for the assessee. However, by mistake, the interest expenditure was claimed under the head Income from other Sources as against Business Income. However, in the absence of supporting material to prove the nexus of borrowed funds with the investment made in the firms, the said plea was rejected. Finally, interest expenditure claimed under the head income from other sources was disallowed. The stand of Ld. AO, upon confirmation by first appellate authority, is under challenge before us.
The Ld. Authorized Representative for Assessee [AR], drawing our attention to the documents kept in the paper-book, sought to put forward assessee’s case by submitting that borrowed funds were used to make investment in the partnership firm and there was nexus between the two. In the above background, it was submitted that the expenditure was allowable against business income earned by the assessee by way of interest from firms. The Ld. DR, on the other hand, pointed out the assessee could not prove the said nexus during assessment proceedings. Upon perusal of documents placed before us, the bench formed an opinion that assessee’s correct income was to be computed in accordance with law. Therefore, the matter stand restored back to Ld. AO for re-adjudication, in the light of submissions made by Ld. AR, before us. Needless to add that adequate opportunity of being heard shall be granted to the assessee. The onus to prove the nexus of borrowed funds with investment made in firms shall rest upon the assessee.
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The appeal may be treated as allowed for statistical purposes.