V Meenakshi, Chennai V. ITO, Non Corporate Circle-10(3), Chennai

ITA 19/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7453 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 01-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: S SRIDHAR

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL, D (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.19/CHNY/2018 / ASSESSMENT YEAR : 2013-2014. V. MEENAKSHI, NO.2, RAJA SADHAN, IST FLOOR, NO.9, GAJAPATHY ROAD, KILPAUK, CHENNAI 600 010. [PAN AFXPM 8802J] VS. THE INCOME TAX OFFICER, NON CORP. WARD 10(3) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 27-06-2018 !' /DATE OF PRONOUNCEMENT : 02-07-2018 % / O R D E R ASSESSEE IN THIS APPEAL ASSAILS AN ORDER DATED 30. 10.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, CHENNA I FOR THE IMPUGNED ASSESSMENT YEAR. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAD RAISED NUMBER OF ISSUES THROUGH ITS GROUND 1 TO 3, EFFECT IVELY ASSESSEE WAS AGGRIEVED ON DISALLOWANCE OF INTEREST OF D7,22,871 /- PAID TO BANK, INTEREST OF D1,66,166/- PAID ON RECURRING DEPOSIT ( RD IN SHORT) LOAN AND ITA NO.19 /CHNY/2018 :- 2 -: SALARY OF D2,62,000/- PAID TO THE DRIVER. LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAD FILED HER RETURN FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF D6,99,610/-. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE WAS DOING F INANCE BUSINESS AND HAD RECEIVED INTEREST ON LOANS GIVEN TO HER SON SHRI. SUBRAMANIAN AND HER DAUGHTER MS. KALPAGAM. CONTENTION OF THE L D. AUTHORISED REPRESENTATIVE WAS THAT AGAINST INTEREST OF D5,05, 000/- RECEIVED FROM THE ABOVE PARTIES AND INTEREST OF D3,54,031/- FROM RECURRING DEPOSITS, ASSESSEE HAD PAID INTEREST OF D7,22,871/- ON BANK L OANS AND INTEREST OF D1,66,166/- ON RD LOANS. AS PER THE LD. AUTHORI SED REPRESENTATIVE, LD. ASSESSING OFFICER TOOK A VIEW THAT ASSESSEE DID NOT AVAIL THE BANK LOANS FOR THE PURPOSE OF LENDING, SINCE THE LOANS GIVEN BY THE ASSESSEE WERE ONLY TO HER SON AND DAUGHTER. AS PER THE LD. AUTHORISED REPRESENTATIVE, EVEN IF IT WAS PRESUMED THAT INTER EST WAS RECEIVED ONLY FROM ASSESSEES CHILDREN, THERE WAS DIRECT NE XUS BETWEEN LOANS GIVEN TO THEM AND LOANS RAISED FROM BANK. ACCORDIN G TO HIM, IRRESPECTIVE OF THE HEAD UNDER WHICH INCOME WAS CO NSIDERED, EXPENDITURE INCURRED FOR EARNING INCOME HAD TO BE ALLOWED. 3. VIZ-A-VIZ, SALARY EXPENDITURE, LD. AUTHORISED REPRE SENTATIVE SUBMITTED THAT IF THE ASSESSEES INCOME WAS CONSID ERED UNDER THE HEAD INCOME FROM BUSINESS THEN SALARY PAID TO T HE DRIVER HAD TO BE ALLOWED. AS PER THE LD. AUTHORISED REPRESENTATIVE, LD. COMMISSIONER OF ITA NO.19 /CHNY/2018 :- 3 -: INCOME TAX (APPEALS) HAD TAKEN A VIEW THAT ASSESSEE WAS NOT DOING ANY FINANCE BUSINESS AND HAD CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT ASSESSEE WAS UNABLE TO SHOW DIRECT NEXUS BETWEEN LO ANS TAKEN BY IT AND CREDITS GIVEN TO HER SON AND DAUGHTER. THEREFOR E AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, CLAIMS OF THE ASSESSEE WERE RIGHTLY DISALLOWED. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FIRST ISSUE IS WH ETHER INCOME OF THE ASSESSEE CAN BE CONSIDERED UNDER THE HEAD INCOME F ROM BUSINESS OR INCOME FROM OTHER SOURCES. LD. COMMISSIONER OF INC OME TAX (APPEALS) HAS CLEARLY NOTED AT PARA 8 OF HIS ORDER THAT ASSESSEE HAD INTIMATED HER INTENTION OF NOT DOING ANY FINANCE B USINESS. THUS, ASSESSEE HAVING AGREED THAT SHE WAS NOT DONG ANY FI NANCE BUSINESS, LOWER AUTHORITIES WERE JUSTIFIED IN TREATING THE I NCOME EARNED BY THE ASSESSEE, WHICH PREDOMINATELY CONSISTED OF SAVING BANK ACCOUNT INTEREST, INTEREST ON LOANS FROM SON SHRI. SUBRAM ANIAN AND DAUGHTER MS. KALPAGAM AND RECURRING DEPOSIT INTEREST, UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NO.19 /CHNY/2018 :- 4 -: 6. COMING TO THE DISALLOWANCE OF SALARY PAID TO DRIVER D2,62,000/-. ASSESSEE WAS UNABLE TO SHOW ANY NEXUS BETWEEN SUCH EXPENDITURE AND EARNING OF THE INTEREST INCOME. ACC ORDINGLY, DISALLOWANCE OF THE SALARY OF D2,62,000/- WAS IN MY OPINION WAS RIGHTLY MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 7. COMING TO THE DISALLOWANCE OF INTEREST OF D7,22,87 1/- ON BANK LOAN AND INTEREST OF D1,66,166/- ON RD LOANS, CLAIM OF THE ASSESSEE IS THAT THERE WAS DIRECT NEXUS BETWEEN LOA NS TAKEN AND THE LOANS GIVEN TO HER CHILDREN SHRI. SUBRAMANIAN AND MS. KALPAGAM. IN MY OPINION, THE LOWER AUTHORITIES DID NOT MAKE A C AREFUL VERIFICATION OF THE NEXUS IF ANY, INTEREST INCOME EARNED BY THE ASS ESSEE HAD WITH THE INTEREST OUTGO. LD. COMMISSIONER OF INCOME TAX (AP PEALS) HAD TAKEN A VIEW THAT ASSESSEE COULD NOT ESTABLISH THE LOAN A MOUNT TO HAVE BEEN UTILIZED FOR THE PURPOSE OF EARNING INTEREST INCOM E, BUT NO REASONS WERE GIVEN BY HIM FOR TAKING HIS VIEW. 8. AS PER SECTION 57(III) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ANY EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING A N INCOME CONSIDERED UNDER THE HEAD INCOME FROM OTHER SOURCES , HAS TO BE NECESSARILY ALLOWED. IN THE FITNESS OF THE THINGS, I AM OF THE OPINION ITA NO.19 /CHNY/2018 :- 5 -: WHETHER BANK INTEREST OF D7,22,871/- AND RECURRING DEPOSIT LOAN OF D1,66,166/- HAD DIRECT NEXUS WITH INTEREST EARNED B Y THE ASSESSEE FOR ALLOWING A CLAIM U/S.57(III) OF THE ACT REQUIRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. I SET ASIDE THE ORDERS OF THE LO WER AUTHORITIES ON THESE TWO ITEMS AND REMIT IT BACK TO THE FILE OF TH E LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 2 ND DAY OF JULY, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:2ND JULY, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /1 / GF