Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI JASON P. BOAZ & SHRI SANDEEP GOSAIN
This appeal by the assessee is directed against the order of the CIT(Appeals)-25, Mumbai dated 27/08/2012 in respect of the order of assessment passed under section 143|(3) of the Income Tax Act, 1961 ( in short ‘the Act’) for assessment year 2009-10.
In this appeal, the assessee has raised the following grounds:-
“1. Learned Commissioner of Income Tax (Appeal)-25, on the facts and circumstances of the case and in law, has erred in disallowing interest expenses of Rs.9,90,741/-
The Appellant respectfully submits that CIT(A) ought to have considered that proceeds of the loan taken on which interest expense was incurred, were utilized for investing in partnership firm for earning interest income which is liable to be taxed under the head “income from business or profession ” and therefore interest expenses was a legitimate business expenses.
2. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal)-25 has erred in not considering and dealing with submissions made by Authorized Representative of the Appellant vide his letter dated 21st August, 2012.
The Appellant respectfully submits that CIT(A) ought to have considered submissions made in the course of appellate proceedings to distinguish the case law relied upon by CIT(A).
3. Appellant craves leave to add to and/or amend and /or modify and/or alter and/or delete the aforesaid grounds of appeal.”
In spite of as many as ten opportunities afforded to the assessee, none was present on behalf of the assessee nor was any application for adjournment filed. Whenever the Bench did not function, the parties were informed of the adjourned dates through the Notice Board. Today i.e. 22/2/2016, when the case was called for hearing, none was present on behalf of the assessee but the Ld. Departmental Representative for the Revenue was present. In these circumstances we are of the opinion that the assessee is not serious about pursuing this appeal and we proceed to dispose the same with the assistance of the Ld. Departmental Representative for the Revenue and the material on record.
In respect of the only issue raised in grounds at S.No.1 to 3, on the issue of disallowance of the assessee’s claim for deduction of interest payment of Rs.9,90,741/- to LIC and HDFC Bank Ltd., the Ld. CIT(A) in the impugned order had held at para 5 thereof as under:-
“ I have given my careful consideration to submission in oral as well as written, perused material on record and duly considered factual matrix of the case as also the applicable legal position. If is undisputed that assessee had shown interest income of Rs. 22,870/- on account of postal monthly income and interest on Savings Bank account. Against this income, assessee had claimed deduction of Rs. 9,90,741/- on account of interest paid to LIC and HDFC bank. By claiming such a huge interest the assessee had claimed loss of Rs. 9,67,871/- under the head 'income from other sources'. It is undisputed that assessee had not filed any revised return. Therefore the action of the AO as correct in view of (original) return of income filed by the assessee for the reason that the impugned interest payment was not for the purpose of earning interest income from Savings Bank account and postal monthly income scheme as disclosed in (original) return of income. It is settled by the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v/s CIT (284 ITR 323) that assessing authority cannot entertain any claim otherwise than by way of revised return. In the case of Goetze (India) Ltd., the Ld.CIT(A) had allowed the assessee's appeal/ claim but Hon'ble ITAT had allowed the appeal of the department the decision of the Ld. CIT(A) . The Hon'ble Supreme Court had upheld the decision of , Hon’ble ITAT allowing the departmental appeal and upholding the order of AD. As discussed herein above there was no revised return and therefore assessee's appeal is not allowable for this reason itself. Without prejudice, the assessee's' appeal fails on merit also. It is admitted that no interest income is received from the firm in which assessee had made impugned investment for which interest claim is made by a simple letter. If there is no interest income, no question arise for allowing deduction against the notional/presumptive income. Even otherwise as per basic accounting principle of "matching of expenses with revenue", being no corresponding revenue, impugned interest expenses are not allowable. Apart there from, there is an another reason which disentitles the assessee for making the said claim. As per the arguments of the Ld.AR, borrowings were made for the purpose of capital requirement/investment in firm in which assessee is a partner. It is undisputed that share of profit from the firm is an exempt income. Therefore section 14A is squarely applicable for the reason that impugned investment was for the purpose of earning exempt income. If the AO would have applied section 14A and computed disallowance under rule 80, resultant disallowance would be much more than instant disallowance. Therefore from all angles the claim of the assessee is not tenable in the eyes of law and appears that it was made to reduce taxable income shown in return of income. Accordingly relevant ground of appeal is rejected and action of the AO is upheld and supplemented with more reasons for disallowance. The AO is advised to verify the returns of preceding succeeding years and if identical claim is made on identical facts, he is free ( albeit duty bound) to take necessary action as per law in relevant year.”
We have heard the Ld. Departmental Representative for the Revenue in the matter in support of the impugned order of the Ld. CIT(A) on this issue and perused and carefully considered the material on record. We find that the assessee has been unable to rebut or controvert the findings of the Ld. CIT(A)(supra) in respect of the disallowance of interest payments of Rs.9,90,741/- to LIC and HDFC Bank Ltd. In the absence of any such explanation and material evidence, we decline to interfere with or deviate from the findings as recorded by the Ld. CIT(A) and accordingly uphold and confirm the same. We consequently, dismiss the grounds No.1 to 3 raised y the assessee.
In the result, the assessee’s appeal for assessment year 2009-10 is dismissed.
Order pronounced in the open court on 24/02/2016