Dipak Dhirajlal Mehta , Pune V. DCIT, Circle-5, Pune

ITA 118/PUN/2021

AI Insights

The case involves Dipak Dhirajlal Mehta, an individual and partner in various firms, who appealed against the order of the CIT(A)-4, Pune, concerning the assessment year 2015-16. The primary issue was the denial of credit for interest paid against the interest income in computing income under 'Income from other sources'. The assessee reported interest income from bank and other sources totaling Rs.7,04,181 and claimed a deduction for interest expenses of Rs.73,53,005, which was not allowed by the Assessing Officer and upheld by the CIT(A). The Tribunal agreed with the lower authorities, emphasizing the lack of a direct nexus between the claimed interest expenditure and the reported interest income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137710 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-04-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.118/PUN/2021 नधा रण वष / Assessment Year : 2015-16 Dipak Dhirajlal Mehta, 613/14, Sevasadan Building, Laxmi Road, Sadashiv Peth, Pune – 411 030 PAN : ABJPM2034Q Vs. DCIT, Circle-5, Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee is directed against the order dated 26-02-2020 passed by the ld. CIT(A)-4, Pune in relation to the assessment year 2015-16. 2. The only issue raised in this appeal is against not allowing credit for interest paid against the interest income in computing the income under the head ‘Income from other sources”. 3. Briefly stated, the facts of the case are that the assessee is an individual, who is partner in various firms etc. While computing income u/s.56 of the Income-tax Act, 1961 (hereinafter also called Assessee by Shri Suhas P. Bora Revenue by Shri Ramnath P. Murkunde Date of hearing 27-01-2023 Date of pronouncement 30-01-2023 ITA No.118/PUN/2021 Dipak Dhirajlal Mehta 2 `the Act’), the assessee showed bank interest income of Rs.22,400/- and other interest of Rs.6,81,781/- aggregating to Rs.7,04,181/- and thereafter claimed deduction towards interest expenses of Rs.73,53,005/-. Net loss under the head ‘Income from other sources’ was shown at Rs.66,71,224/-. On being called upon to explain the details of borrowing on which interest of Rs.73.53 lakh was paid, the assessee submitted that the amount borrowed was utilised for making business investments towards purchase of properties. The Assessing Officer (AO) refused deduction for such sum, which action came to be echoed in the first appeal. 4. Having heard both the sides and gone through the relevant material on record, it is seen that the assessee declared interest income under the head ‘Income from other sources’ at Rs.7,04,181/- and thereafter claimed deduction for interest expenditure of Rs.73,53,005/-. Deductions under the head ‘Income from other sources’ are enshrined in section 57. Clause (iii) of section 57 provides that the income chargeable under the head ‘Income from other sources’ shall be computed after making the deduction for “(iii) any other expenditure (not being in the nature of capital expenditure) laid down or expended wholly and exclusively for the purpose of making or earning such income”. ITA No.118/PUN/2021 Dipak Dhirajlal Mehta 3 This shows that there should be a direct nexus between the deduction claimed u/s 57 and the amount of income offered u/s.56(1) of the Act on gross basis. Adverting to the facts of the instant case, it is seen that the assessee received interest income consisting of bank interest etc., and claimed deduction towards interest on monies borrowed for the purpose of making business investments towards purchase of properties. This deciphers that such payment of interest has no nexus whatsoever with the interest income offered. When confronted, the ld. AR was candid in his admission of the factual position. In the given facts and circumstances, we countenance the view taken by the authorities below in not granting deduction of interest expenditure of Rs.73.53 lakh against the interest income under the head `Income from other sources’. 5. In the result, the appeal is dismissed. Order pronounced in the Open Court on 30 th January, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 30 th January, 2023 सतीश ITA No.118/PUN/2021 Dipak Dhirajlal Mehta 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. The CIT(A)-4, Pune 4. 5. The Pr. CIT-3, Pune DR, ITAT, ‘A’ Bench, Pune 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 27-01-2023 Sr.PS 2. Draft placed before author 27-01-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *