SURESH SHIVLAL BHASIN, MUMBAI V. ACIT CIR 20(3), MUMBAI

ITA 1298/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9587 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: MUKESH B ADVANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 1298 / MUM/20 1 5 & 1299/MUM/2015 ( ASSESSMENT YEAR : 2009 - 10 & 2011 - 12 ) SHRI SURESH SHIVLAL BHASIN 301, BUILDING NO.2B, GREEN ACRES LO KHANDWALA COMPLEX, ANDHERI (W) MUMBAI 400 053 VS. ACIT CIR 20(3), 506, PIRAMAL CHAMBERS PAREL, MUMBAI 400 012 PAN/GIR NO. AADPB0721E APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI MUKESH B ADVANI REVENUE BY SHRI V. JUSTIN D ATE OF HEARING 05 / 09 /201 7 DATE OF PRONOUNCEME NT 13 / 09 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 37, MUMBAI DATED 22/12/2014 FOR THE A.Y.2009 - 10 AND 2011 - 12 IN TH E MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. COMMON GRIEVANCE OF ASSESSEE IN BOTH THE YEARS RELATE S TO DECLINE OF CLAIM OF DEDUCTION OF INTEREST ON OVERDRAFTS TAKEN FROM BANK. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF FOR THE A.Y.2009 - 10 ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAD FILED THE R/I ON 25.09.2000 DECLARING TOTAL INCOME OF RS.1,25,39,250/ - . THE ASSESSEE HAD SHOWN RECEIPT OF INTEREST FROM VARIOUS INVESTMENTS OF RS.43,37,500/ - . AS AGAINST THIS GROSS RECEIPT , HE CLAIMED DEDUCTION OF ITA NO.1298/MUM/2015 & 1299/MUM/2015 SHRI SURESH SHIVLAL BHASIN 2 RS.11,83,282/ - BEING THE INTEREST PAID ON OVERDRAFT FACILITY TAKEN FROM THE BANK AGAINST THE FD MADE WITH THE BANK. 4. DURING ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE GROSS RECEIPTS OF THE A SSESSEE FROM INTEREST ON VARIOUS DE POSITS AMOUNTED TO RS.43,37,500/ - . THE AO FURTHER NOTED THAT THE A SSESSEE HAD OFFERED INTEREST INCOME ONLY TO THE EXTENT OF RS. 31,54,213/ - IN THE RETURN FILED AND CLAIME D THE DIFFERENCE OF RS. 11,83,282/ - AS EXPENSES INCURRED FOR EARNING THE SAID INCOME. THE AO ASKED THE ASSESSEE TO EXPLAIN HOW THIS AMOUNT WAS DEDUCTIBLE U/S 57 AND OBSERVED THAT THE FIXED DEPOSITS ON WHICH INTEREST WAS EARNED WERE DEPOSITED BEFORE THE A.Y. UNDER CONSIDERATION WHEREAS THE INTEREST CLAIMED AS DEDUCTION WAS PAID ON THE O D ACC OUNT . ACCORDINGLY, AO DECLINED DEDUCTION OF INTEREST UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT WAS POINTED OUT BY LEARNED AR THAT OVERDRAFT LIMIT WAS TAKEN SO AS TO ENABLE ASSESSEE TO CONTINUE THE FD OTHERWISE ASSESSEE COULD NOT HAVE EARNED INTEREST ON SUCH FD, THEREFORE, NETTING OF INTEREST SHOULD BE ALLOWED AND ONLY NET INTEREST ON SUCH FD SHOULD BE BROUGHT TO TAX NET. 7. OUR ATTENTION WAS INVITED TO THE FUND FLOW STATEMENT FOR BOTH THE YEARS PLACED BEFORE THE LOWER AUTHORITIES AS WELL AS STATEMENT OF APPLICATION OF INTEREST FREE A ND INTEREST BEARING FUNDS. IT APPEARS THAT LOWER AUTHORITIES ITA NO.1298/MUM/2015 & 1299/MUM/2015 SHRI SURESH SHIVLAL BHASIN 3 HAD NOT PROPERLY APPRECIATED THE OBJECT OF OVERDRAFT AND ITS UTILIZATION FOR EARNING INTEREST INCOME . A S PER OUR CONSIDERED OPINION EXPENDITURE INCURRED FOR EARNING INCOME SHOULD BE ALLOWED U/S.5 7( III ) WHILE COMPUTING INCOME FROM OTHER SOURCES. 8. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR VERIFYING THE FUND FLOW STATEMENT AND STATEMENT OF APPLICATION OF INTEREST FREE AND INTEREST BEARING FUNDS VIS - - VIS INTEREST INCOME EARNED BY THE ASSESSEE OUT OF SUCH BORROWED FUNDS AND FOR DECIDING THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 9. FACTS AND CIRCUMSTANCES DURING THE A.Y.2011 - 12 ARE PARAMETRIA , THEREFORE, FOLLOWING THE REASONING FOR A.Y.2 009 - 10 AS STATED ABOVE, MATTER IS RESTORED BACK TO THE FILE OF THE AO. 10. IN THE RESULT, APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 09 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 09 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//