ADARSH SAHAKARI GHAR BANDHNARI MANDALI LTD,SURAT vs. INCOME TAX DEPARTMENT, NFAC, DELHI

3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.”

Aggrieved by the additions in the assessment order the assessee filed appeal before Ld. CIT(A). The appeal of assessee migrated before NFAC/Ld. CIT(A). Before NFAC/Ld. CIT(A) the assessee filed its submission as recorded in pages 7 to 9 of the order of NFAC/Ld. CIT(A). The assessee in its submission, submitted that expenses on internet subscription were incurred for the members as assessee is a mutual benefit society and such expenses were paid for the benefit of its members, who are directly related to the objects of the society and for benefit to members. So the internet subscription is allowable. Similarly, on Airtel subscription the assessee claimed being a mutual benefit society and expense was paid for the benefit of its members also. The assessee further explained that now-a-days it is common practice to provide such type of service to its members for providing facility to the members of the housing society and all ancillary services to its main object and assessee and prayed to allow such expenses.

The NFAC/Ld. CIT(A) after considering the submission of assessee held that Assessing Officer has correctly (A.Y 13-14) Adarsh Sahakari Ghar Bandhnari Mandali Ltd. observed that such expenses are not covered under section 57 of the Act and does not require interfere with the action of Assessing Officer. Further aggrieved the assessee has filed present appeal before the Tribunal.

I have heard the submission of Ld. Authorized Representative (Ld. AR) for the assessee and Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue. The Ld. AR for the assessee submits that assessee is a mutual association though, registered under the provision of Co-Operative Society Act. He has filed copy of receipt of Airtel TV/Dish TV charge for one year for 106 units @ 6000/- per unit and activation kit of Rs.999, aggregating of Rs.6,36,999/-. The Ld. AR for the assessee submits that assessee has also filed payment slip of Rs. 2,45,780/- paid to hathway Cable Operator. The Ld. AR for the assessee submits that both the expenses are allowable expenses as assessee is working for mutual association without any motive of earning. Interest income earned by the assessee is the only income, thus, such expenses are allowable expenses.

On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. The ld Sr DR for the revenue submits that only those expenses which were incurred for earning interest income can be allowed under section 57.

I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I find that case of assessee claimed expenses of Rs.2,72,830/- on account of internet subscription and Rs.6,43,998/- on account of Airtel subscription under section 57 of the Act. The Assessing Officer disallowed by taking view that such expenses are not allowable under section 57. The ld CIT(A) confirmed the action of assessing officer with similar view. Before me, the ld AR for the assessee could not show any decision in his favour supporting his submissions, except arguing that such expenses were incurred for the benefits of its members. I am unable to accepts the submissions of the ld AR for the assessee. It is settled position of law that under section 57 (in the head ‘other source’), deduction is to be made in respect of expenditure incurred solely for the purpose of (A.Y 13-14) Adarsh Sahakari Ghar Bandhnari Mandali Ltd. earning such income, provided the expenditure are not capital expenditure or personal in nature. To be more specific there should be some nexus between the expenditure incurred and the interest income. Such nexus is totally missing in the present case. Therefore, I do not find any merit in the grounds of appeal