ANUBHAV PLANTATIONS LTD. IN LIQUIDATION),CHENNAI vs. ITO CORPORATE WARD 1(1), CHENNAI

This is an appeal filed by the Assessee against the order of the learned Commissioner of Income Tax (Appeals)-1, Chennai in 1/2015-16 dated 29.03.2018 for the Assessment Year 2012-13.

It was submitted by the learned Authorized Representative that the assessee is a company under liquidation. It was a submission that the assessee had e-filed his return of income for the relevant Assessment Year on 04.09.2012 admitting income at ‘NIL’. It was a submission that the Assessing Officer has disallowed an amount of Rs.48,22,936/- representing certain expenditure incurred by the assessee on the ground that no TDS has been deducted u/s.40(a)(ia) of the Income Tax Act, 1961. It was a submission that on appeal the learned CIT(A) had decided the issue of the non-deduction of TDS in favour of the assessee but had proceeded to hold that the assessee had only interest income and therefore the income was liable to tax under the head “income from other sources” and the expenditure claimed to Rs.48,22,936/- did not relate to the earnings of the interest income and therefore disallowed the same u/s.57(iii) of the Income Tax Act, 1961. It was a submission of the learned Authorized Representative that the assessee has not claimed on the said claimed expenditure of Rs.48,22,936/- in so far as it was a capital expenditure. It was fairly agreed by the learned Authorized Representative that he had no objection if the issue was restored to the file of the Assessing Officer for examination and to examine if any expenditure had been incurred for the purpose of earning interest income and if there were any expenditures for the purpose of earning of interest income and such 3 -: expenditure has been claimed by the assessee, then the same was liable to be allowable.

In reply, the learned Departmental Representative supported the order the learned Assessing Officer and the learned CIT(A).

We have considered the rival submission and perused the materials available on record.

A perusal of the facts in the present case shows that the Assessing Officer had originally disallowed an amount of Rs.48,22,936/- on account of non-deduction of TDS. The learned CIT(A) shifted the disallowance from the non-deduction of TDS to non-allowable u/s.57(iii) of the Income Tax Act, 1961. The assessee claims that he has not claimed the expenditure in his income expenditure accounts. The income expenditure accounts are not before us. This being so, in the interest of justice, the issues in this appeal are restored to the file of the Assessing Officer for re-adjudication and verification as to the expenditure, if any, claimed by the assessee in his income expenditure accounts. If the assessee, has claimed any specific expenditure, then it is open to the Assessing Officer to examine whether the same has been incurred for the purpose of maintaining the status of the company and whether it has been an expenditure for earning the interest income and whether the said expenditure are allowable under the head “income from other sources”. Admittedly, the assessee has offered interest income which is accessible under “income from other sources”.

In the result, the appeal of the assessee is partly allowed for statistical purposes.