VIJAYARANGAM PILLAI LOHIT KUMAR,CHENNAI vs. ITO, NCC-3(1),, CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-07-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 01-02-2021. The sole grievance of the assessee is disallowance of expenditure u/s 57(iii). Having heard rival submissions, the appeal is disposed-off as under.

The assessee rented out certain properties for commercial purposes. The assessee offered building maintenance, GST, Service Tax, interest etc. for Rs.45.27 Lacs as ‘Income from other sources’. At the same time the assessee claimed expenditure of GST, Service tax, building maintenance, Genset expenses, Lift Maintenance and Electricity Charges aggregating to Rs.51.55 Lacs against the same. Out of expenditure of Rs.19.54 Lacs as claimed on account of building maintenance, Genset expenses, Lift Maintenance and Electricity charges, the amount of Rs.8.32 Lacs was paid from assessee’s own bank account whereas the remaining expenditure of Rs.11.21 Lacs was paid through bank account of HUF as detailed in the assessment order. The assessee submitted that the payments effected through HUF account were deemed as loan from HUF. However, in the absence of sufficient documentary evidences as forthcoming from the assessee, the aforesaid submissions were rejected and the expenditure of Rs.11.21 Lacs was disallowed. The Ld. CIT(A) noted that the assessee failed to establish the nexus between the income earned and expenditure incurred. The conditions specified u/s 57 for allowing expenses incurred wholly and exclusively for earning the income had not been fulfilled by the assessee. The assessee failed to substantiate the same even during appellate proceedings. Accordingly, the stand of Ld. AO was confirmed. Aggrieved, the assessee is in further appeal before us.