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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order by the Commissioner of Income Tax (Appeals)-57, Mumbai dated 11.01.2016 and pertains to the assessment year 2011-12.
The issues raised in grounds of appeal read as under:
The learned Commissioner of Income-tax (Appeals) - 57, Mumbai, ['the Id. CIT (A)'] erred in confirming the action of the Assessing Officer (the 'A.O.') whereby he disallowed Rs.2,00,000/-, being traveling expenses and other expenses claimed by the Appellant for earning income under the head Income from Other Sources, chargeable / taxable under section 56 of the Income - tax Act, 1961 ('the Act').
2. The Id. CIT (A) erred in confirming the action of the A.O. whereby he assessed the interest of Rs. 1,57, 692/-, received by the Appellant during the year
Lal Nathirmal Moolchandani on income tax refund for A.Y. 2009 - 10 upon its return being processed under section 143 (1) of the Act.
Apropos ground no. 1:
Brief facts of the case are as under:
The assessee is a non-resident individual showing income from House property, short term capital gain and income from other sources. On verification of the details filed during the course of assessment proceedings, it is seen that assessee has claimed deduction u/s.57 on travelling expense of Rs.2,00,000/-, against compensation for amenities shown under other source of income. The Assessing Officer has disallowed the claim of Rs.2 lakh which has been claimed on account of travelling and other expenses.
The assessee has submitted before the Assessing Officer that these are expenses related to management of his property in India.
Before the ld. Commissioner of Income Tax (Appeals), the assessee repeated the same submission claiming that to manage the property the assessee has to travel in India and hence it was claimed that the claim of travel expenses should be allowed against the amount received for the use of amenities of the property. It was further submitted that the assessee has visited many times in India and the travelling and lodging expenses are more than the amount claimed. The ld. Commissioner of Income Tax (Appeals) did not accept the assessee’s submissions and held as under:
I have gone through the facts of the case and the merits of the arguments of the appellant. On going through the provisions of Sec.57 it is seen that the only Clause under which the appellant could have claimed the said expenditure would be if it can be demonstrated that the said expenditure was laid out or expended wholly and exclusively for the purpose of making or earning such income. There is Lal Nathirmal Moolchandani nothing to suggest that this is the fact of the circumstances of the appellant. Therefore, in the light of this I am in agreement with the AO that Rs. 2 lakhs of expenses claimed on account of travelling and other expenses would not be liable. The ground of appeal is thereby rejected.
Against the above order, the assessee is in appeal before us.
We have heard both the counsel and perused the records. We find that the assessee in this case is claiming travelling expenses against the amount received from house property against use of amenities in the said house property. The assessee’s plea is that the assessee had to incur huge expenditure in travelling to India to manage the property.
We find that this submission of the assessee has been rejected by the authorities below.
We find ourselves in full concurrence that no travelling expenses can be allowed for assessee’s international travel for income received related to house property in India. This is more so when the amount claimed is lump sum without any supporting whatsoever.
Hence, we do not find any infirmity in the order of the authorities below and, hence, we uphold the same.
Apropos ground no.2:
Brief facts on this issue are that the assessee received interest of Rs.1,57,692/- on refund for assessment year 2009-10 on 26.03.2011. However, this interest was not shown as income in the return of income. When questioned in this regard, the assessee responded as under:
Regarding interest u/s 244A of Rs.1,57,692/- demand draft 26.03.2011 was received (inclusive of excess of TDS/Advance Tax) and the same was received on 30.3.2011 enchases on 05.4.2011. Subsequently, after scrutiny of the case, assessment order u/s 143(3) was passed on 08.12.2011 raising a total demand of Lal Nathirmal Moolchandani Rs.24,67,560/-. This includes the refund granted earlier at the time of processing the return of income u/s 143(1). That means the interest of Rs.1,57,692/- was withdrawn along with interest u/s 234D of Rs.73,588/-. Thus the interest of Rs. 1,57,692/- was received during F.Y. 2011-12 and was withdrawn by the A.O in the F. Y. 2011-12 itself.
However, the Assessing Officer was not satisfied. He held that the interest paid by Income Tax Department was to be considered as income of the assessee. Upon the assessee’s appeal, the ld. Commissioner of Income Tax (Appeals) upheld the action of the Assessing Officer.
Against the above order, the assessee is in appeal before us.
We have heard both the counsel and perused the records. We find that the assessee has received an interest on refund for assessment year 2009-10 in the present assessment year on 31.03.2011. The said cheque was encashed subsequently. Subsequently, vide assessment order passed u/s. 143(3) on 08.12.2011 for the same assessment year a total demand of Rs.24,67,560/- was raised which included the refund granted earlier. Thus, the refund granted earlier stood withdrawn. Hence, the assessee’s claim is that the interest of Rs.1,57,692/- which was received during the financial year 2011-12, was withdrawn by the Assessing Officer in financial year 2011-12 itself. We find that there is considerable cogency in the submission of the assessee and the interest on refund granted was withdrawn when the demand of Rs.24,67,560/- was raised for the same assessment year subsequently. Hence, when the income stood withdrawn there is no question of the assessee offering the same as income. We find that this view also gets support from the ITAT decision in the case of Assistant Director of Income-tax, (International Taxation) -
Lal Nathirmal Moolchandani 1(1), Mumbai vs. Credit Agricole Indosuez [2013] 33 taxmann.com 441 (Mum-Trib). In this case, it was expounded that only that much interest u/s. 244A can be brought to tax which is finally determined on assessment. In the present case, in the final assessment huge demand has been raised and there was no question of assessment of any interest income. Hence, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the addition.
In the result, this appeal by the assessee stands partly allowed.
Order pronounced in the open court on 25.06.2018