Sh. Hari Shanker Barua, Mathura V. I.T.O., Ward-4(2), Agra

ITA 107/AGR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89201 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: PANKAJ GARG
• Keywords: Capital expenditure
• Section: 143(3)

Judgement Text

I.T.A. NO.107/AGRA/2014 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA [CORAM: PRAMOD KUMAR AM] ITA NO.107/AGRA/2014 ASSESSMENT YEAR: 2008-09 HARI SHANKER BARUA, ...................... .APPELLANT 23, SANT COLONY, KAILA KRISHNA HOUSE, VRINDAVAN, MATHURA. [PAN: AFXPB 9769 B] VS. INCOME TAX OFFICER, ......RESPONDENT WARD 4(2), AGRA. APPEARANCES BY: PANKAJ GARG, FOR THE APPELLANT AMIT SHUKLA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 19 TH JUNE, 2015 DATE OF PRONOUNCING THE ORDER : 24 TH JUNE, 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 27 TH NOVEMBER 2013, PASSED BY LD. CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) , FOR THE ASSESSMENT YEAR 2008-09. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS UNDER : - 1. BECAUSE THE LD. CIT(A) HAS WRONGLY, ILLEGALLY A ND ARBITRARILY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R OF RS.3,42,641/- WHICH IS THE AMOUNT OF INTEREST PAID TO BANK ON LOAN TAKE N. 2. BECAUSE THE LOAN HAS BEEN TAKEN AGAINST THE SECU RITY OF FDR. THE INTEREST PAID TO BANK WAS DEDUCED FROM THE INTEREST RECEIVED ON FDR. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST PAID MADE BY THE ASSESSING OFFICER. I.T.A. NO.107/AGRA/2014 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 3 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE HAD EARNED INTEREST INCOME OF RS.3,80, 977/- FROM FIXED DEPOSITS WITH A BANK, AND THE ASSESSEE HAD INTEREST OF RS.3,42,641/ - IN RESPECT OF BORROWINGS ON THAT LOAN. THE ASSESSEE OFFERED INTEREST INCOME ON NET BASIS BUT THE ASSESSING OFFICER DECLINED THE DEDUCTION IN RESPECT OF INTEREST SO PA ID. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) REJECTED THE GRIEVANCE OF THE ASSESSEE BY OBSERVING, INTER ALIA , AS FOLLOWS :- 6.2 I HAVE CONSIDERED THE ABOVE ARGUMENTS TAKEN BY THE ASSESSEE (APPELLANT). FOR A READY REFERENCE, THE PROVISION OF SECTION 57(III) RELATING TO ANY EXPENDITURE TO BE ALLOWED AGAINST THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE PROVISIONS OF S ECTION 70(1) ARE REPRODUCED AS UNDER : 57(III):- ANY OTHER EXPENDITURE (NOT BEING IN TH E NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. 70(1):- SAVE AS OTHERWISE PROVIDED IN THIS ACT, WH ERE THE NET RESULT FOR ANY ASSESSMENT YEAR IN RESPECT OF ANY SOURCE FA LLING UNDER ANY HEAD OF INCOME, OTHER THAN CAPITAL GAINS, IS A LO SS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS S ET OFF AGAINST HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. 6.3 AS PER THE SECTION 57(III), IT HAS BEEN PROVIDE D THAT ONLY SUCH EXPENDITURE ARE ALLOWED TO BE DEDUCTED AGAINST THE INCOME FROM OTHER SOURCES THAT HAVE BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. IN THE P RESENT CASE, THE ASSESSEE WAS ALREADY HAVING FDR WITH THE BANK ON WHICH, HE W AS EARNING INTEREST. SUCH INVESTMENT IN FDR WAS NOT MADE OUT OF ANY BORR OWED FUND. IN FACT, THE ASSESSEE HAS SUBSEQUENTLY BORROWED FUND FROM THE BA NK BY KEEPING THE FDR AS SECURITY AND THIS LOAN INSTEAD OF UTILISING HIMS ELF FOR ANY BUSINESS OR PROFESSION, HE GAVE THIS LOAN TO HIS WIFE SMT. MITH ILESH BARUA WITHOUT CHARGING ANY INTEREST, THEREFORE, IT IS VERY CLEAR THAT THE LOAN TAKEN FROM THE BANK ON THE SECURITY OF THE FDR ON WHICH INTEREST H AS BEEN PAID, CANNOT BE SAID TO BE AS LAID OUT OR EXPENDED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF EARNINGS OF INTEREST FROM FDR AND, THEREFORE, THE I NTEREST OF RS.3,42,641/- PAID BY THE ASSESSEE ON THE LOAN TAKEN FROM THE BAN K CANNOT BE ALLOWED TO BE DEDUCTED UNDER THE PROVISION OF SECTION 57(III). THEREFORE, I FIND THAT THE AO HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE F OR DEDUCTION OF THE INTEREST OF RS.3,42,641/- U/S 57. I.T.A. NO.107/AGRA/2014 ASSESSMENT YEAR: 2008-09 PAGE 3 OF 3 4. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 5. I FIND THAT THE CASE OF THE ASSESSEE PRIMARILY R ESTS ON A DIVISION BENCH DECISION OF THIS TRIBUNAL WHEREIN IT WAS HELD THAT WHERE IN ORD ER TO PROTECT INTEREST EARNINGS FROM FIXED DEPOSITS, ASSESSEE RAISED A LOAN AGAINST SAID DEPOSITS AND PAID INTEREST THEREON, EXPENDITURE SO INCURRED WOULD BE WHOLLY AND EXCLUSI VELY TO EARN SUCH INCOME, AND THEREFORE, DEDUCTION UNDER SECTION 57(III) WILL HAV E TO BE ALLOWED IN RESPECT OF THE SAME. ON A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW , I DO NOT FIND THAT THE RELATED FACTS HAVE BEEN ANALYSED ON THIS ASPECT OR EVEN SET OUT P ROPERLY. THERE IS NO FINDING THAT THE INTEREST WAS ON LOANS BORROWED AGAINST FIXED DEPOSI TS AND TO KEEP THE FIXED DEPOSITS ALIVE. 6. IN VIEW OF THE ABOVE DISCUSSIONS, I DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION IN ACCORDANCE WITH THE LAW BY WAY OF A SPEAKING ORDER AND IN THE LIGHT OF MY ABOVE OBSERVA TION. I ORDER SO. 7. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON 24 TH JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTAN T MEMBER) AGRA, THE 24 TH JUNE, 2015 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNE D (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA