RRPR Holding Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4700/DEL/2014

AI Insights

The case involves RRPR Holding Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-XVIII, New Delhi, concerning the assessment year 2010-11. The primary issue was the denial of carry forward of long-term capital losses claimed in a revised return filed under Section 139(5) of the Income Tax Act, 1961. The Assessing Officer and CIT(A) both rejected the claim on the grounds that the revised return was filed beyond the due date prescribed under Section 139(1), and thus, the losses could not be carried forward as per Section 80 read with Section 139(3) and 139(5) of the Act. The Tribunal agreed with the lower authorities, emphasizing that the revised return could not be used to introduce new claims that were not present in the original return filed within the stipulated time under Section 139(1).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121629 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-03-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 26-08-2014
• Other Referred Cases: Pr.CIT vs. Babubhai Ramanbhai Patel, Dharampur Sugar Mills Ltd. vs. CIT, Ramesh R. Shah Vs. AC IT, Karnataka Forest Development Corp. Ltd. vs. CIT, Prima Agro Ltd. vs. CIT, Smt. Jawahar Kanungo vs. ITO, CIT vs. Alok Enterprises, Kumar Jagdish Chandra Sinha vs. CIT, Fidelity Business Services India Pvt. Ltd. vs. ACIT, CIT vs. Jansampark Advertising and Marketing Pvt. Ltd., CIT vs. Chalisgaon People's Co-op. Bank Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 143(3); 37(1); 139(5); 143(2); 139(1); 139(4); 9(1); 9(1); 9(1); 72; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.4700/DEL/2014 Assessment Year 2010-11 RRPR Holding Private Limited B-207, Greater Kailash-I, New Delhi. Vs. Deputy Commissioner of Income Tax Circle-15(1), C.R. Building, New Delhi. TAN/PAN: AADCR1710Q (Appellant) (Respondent) Appellant by: Shri Sachit Jolly, Adv. Shri Rohit Garg, Adv. Ms. Disha Jham, Adv. Respondent by: Shri T. Kipgen, CIT-DR Date of hearing: 14.11.2022 & 24.03.2023 Date of pronouncement: 22 06 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order of the Co mmissioner of Inco me Tax (Appeals)- XVI II, Ne w Delhi [‘CIT(A) ’ in short] dated 26.06.2014 arising fro m the assessment order dated 30.03.2013 passed by the Assessing Officer (AO) under Section 143(3) of the Inco me Tax Act, 1961 (the Act) concerning AY 2010-11. I.T.A. No.4700/Del/2014 2 2. The grounds of appeal raised by the assessee read as under: “ 1 . T h a t t h e d i s a l l o w a n c e o f c a r r y f o r w a r d o f l o n g t e r m c a p i t a l l o s s c l a i m e d o n t h e s a l e o f s h a r e s i n t h e r e v i s e d r e t u r n o f R s . 2 0 6 , 2 5 , 5 3 , 8 0 1 / - a s s u s t a i n e d b y t h e H o n ' b l e C I T (A p p e a l s ) i s a r b i t r a r y , u n j u s t , u n w a r r a n t e d a n d u n t e n a b l e o n v a ri o u s f a c t u a l a n d l e g a l g r o u n d s . 2 . T h a t t h e d i s a l l o w a n c e o f i n t e r e s t / f i n a n c i a l c ha r g e s t o t h e e x t e n t o f R s . 2 6 , 4 4 , 1 7 6 / - , i n c u r r e d b y t h e a p p e l l a n t c o m p a n y f o r a c q u i r i n g t h e s h a r e s i n N D T V L i m i t e d a s s u s t a i n e d by t h e H o n ' b l e C I T ( A p p e a l s ) i s u n j u s t , u n w a r r a n t e d a n d u n t e n a b l e on v a r i o u s f a c t u a l a n d l e g a l g r o u n d s 3 . T h a t t h e d i s a l l o w a n c e o f i n t e r e s t t o t h e e x t e n t o f R s . 2 6 , 4 4 , 1 7 6 / - b y A O / C I T ( A p p e a l s ) o n t h e f u n d s b o r ro w e d f o r t h e p u r p o s e o f a c q u i r i n g c o n t r o l l i n g s t a k e i n t h e C o m p an y , i s n o t i n a c c o r d a n c e i n l a w a n d t h e i n t e r e s t r e c e i v e d o n b a n k F D s h a s t o b e a d j u s t e d a g a i n s t t h e i n t e r e s t p a i d o n b o r r o w e d f u n ds , h a v i n g a d i r e c t n e x u s a n d t h e r e m a i n i n g i f a n y o n l y c a n b e ta x e d . ” 3. Ground No.1 concerns eligibility of Long Ter m C apital Loss (LTCL) on sale of shares claimed b y wa y of re vised return filed under S. 139(5) of the Act. 4. Briefl y stated, t he assessee is an Investment Holding Co mpan y set up to acquire and hold shares of NDTV Ltd. and its Group Cos. The Assessee, in the instant case, filed its original return of income under S. 139(1) of the Act on 15.10.2010 declaring total income at Rs.4,17,005/- concerning Assess ment Year 2010-11 in question. The original return so filed by the assessee was subjected to scrutiny assess ment b y issuance of notice under Section 143(2) dated 29.08.2011. Pending completion of the assessment under Section 143(3), the assessee filed revised return under S. 139(5) of the Act on 02.02.2012. The assessee claimed that it has filed revised return of income within the ti me li mit pr escribed under S. 139(4) of I.T.A. No.4700/Del/2014 3 the Act and original return within the ti me li mit prescribed under S. 139(1) of the Act. As per the revised return, the assessee clai med Long Ter m Capital Loss(LTCL) of Rs.206.25 crore arising on sale of shares together with Inco me Rs.4,17,005/- under the head “ income fro m other source” declared earlier in the original return. The assessee has thus clai med a carr y f orward of capital loss of Rs.206.25 crore as reported in the revised return. The Assessing Officer inter alia noted that no such loss arising on sale of share were clai med in the original return filed by the assessee. Subsequently, inquiries in respect of certain transactions entered into by the assessee were carried out by the Investigation Wing Delhi. Fol lowing the sa me , the assessee revised its return of inco me a fter l apse of 17 months and filed revised return of 02.02.2012 whereby the i mpugned Long Ter m Capital Loss (LTC L) was clai med. The Assessing Officer observed that such revised return is not a valid return and thus nonest in the e yes of law. The Assessing Officer made re ference to Secti ons 80, 139(3) and other provisions of the Act and refused to admit the claim of Long Ter m C apital Loss and consequently car r y forward t hereof for set off against the income of the later years was denied. The AO noted that there is not even an iota of reference of any transaction involving any capital gains or capital loss in the original return. The AO also noted that as per section 139(3), for entitlement of carr y for ward of losses arising in the current assessment year , the loss return has to be necessarily filed within the time all owed for filing return under S 139(1) whereas in the instant case, the capital transactions resulting in huge loss I.T.A. No.4700/Del/2014 4 has been claimed for the first time in the revised return filed beyond the ti me limit stipulated under S. 139(1) of the Act. The AO thus denied clai m of LTCL for carr y- forward and set off in subsequent assessment years. 5. Aggrieved by the non-admission of clai m of Long ter m Capital Loss presented in the revised return, the assessee preferred appeal before the CIT(A) . Before the CIT(A) as well, the assessee contended that once the assessee has filed original return on due date as prescribed under Section 139(1) of the Act, the assessee is entitled to file the revised return within the ti me li mit prescribed under Section 139(5) of the Act. It was contended that revised return filed within ti me li mit prescribed under Section 139(5) of the Act will substitute the original return filed earlier and the clai m made in the revised return resulting in losses cannot be brushed aside. It was contended that the view taken by the Assessing Officer that the loss return must be necessarily filed within ti me li mit allowed under Section 139(1) as provided in S. 139(3), to enable the assessee to claim carr y f orward thereof, i s misdirected in law as a consequence of mi sconstruction of the provisions of the Act. 6. The CI T(A) howe ver did not find merit in the plea of the assessee and deter mined the issue against the assessee and consequently confir med the action of the Assessing Officer. The CIT( A) reiterated the conclusion of the Assessing Officer that in order to be entitled to carr y forward the losses, the return has to be necessarily fil ed within time limit prescribed under Section 139(1) of the Act. Ho wever, the lo ss in the instant case, has I.T.A. No.4700/Del/2014 5 been claimed b y filing revised return under Section 139(5) of the Act, be yond the ti me li mit prescr ibed under Section 139(1). 7. Further aggrieved, the assessee preferred appeal before the Tribunal. The ld. counsel for the assessee broadly rei terated the submissions made before the lower authorities and contended that where the original return albeit has been filed on or before the due date under Section 139(1) of the Act, the assessee is entitled in law to revise the return under Section 139(5) of the Act within due date prescribed therein. The assessee in the instant case has filed the original return as well as the revised return within due date prescribed under Section 139(1) and Section 139(5) respectively. Thus, the loss arising on sale of shares claimed as Long Ter m Capi tal Loss is not hit by the e mbargo placed under Section 80 of the Act. The ld. counsel relied upon the judgments rendere d in the case of Pr.CIT vs. Babubhai Ramanbhai Patel (2017) 84 taxman.com 32 (Guj.); Dharampur Sugar Mills Ltd. vs. CIT, 90 ITR 236 (Alld) and the decision of the Co-ordinate Bench rendered in Ramesh R. Shah Vs. AC IT, I TA N o.4312/MUM/2009 order dated 29.07.2011 to buttress the aforesaid proposition. The ld. Counsel thus submitted that the denial of carr y f orward of losses clai med in the revised return is opposed to the scheme of the Act as interpreted by the judicial dicta and hence requires to be reversed and the clai m made towards Long Ter m Capi tal Losses by wa y of revised return requires to be ad mitted and the loss be directed to be carr y forward for set off in accordance with law against the income arising in the subsequent assessme nt years. I.T.A. No.4700/Del/2014 6 7. The ld. CIT- DR o n the other hand strongly relied upon the assessment order and the first appellate order. The ld. CIT- DR submitted that the loss return under Section 139(3) must be necessarily filed within the due date prescribed under Section 139(1) of the Act to avoid the rigors of Section 80 of the Act. In the instant case, the assessee has not clai med the losses in the original return at all. The losses clai med has co me into vogue by virtue of revised return which was filed subsequent to the due date prescribed under Section 139(1) of the Act an d thus the revised return seeking to make a ne w clai m giving rise to losses cannot be allowed in defiance of the provisions of the Act regardless of the fact that revised return has been filed within the due date prescribed under Section 139(5) of the Ac t. 8.1. The ld. CI T-DR next sub mitted that the clai m of c apital loss has been mad e for the first time in the revised return and it is not a case where the claim of loss made in the original return has been modified in the revised return. The ld. CIT-DR referred to and relied upon the following decisions to support the addition of the Revenue. • Karnataka Forest Develop ment Corp. Ltd. vs. CI T, 23 tax mann.co m 314 (Bang ITAT) • Pri ma Agro Ltd. vs. CIT, 21 taxmann.co m 527 (Kerala High Court) • S mt . Ja wahar Kan ungo vs. ITO, 1 S OT 254 (Mu m I TAT) • CIT vs. Alok Enterprises, 266 ITR 3 99 (SC) I.T.A. No.4700/Del/2014 7 8.2 The Ld. CI T(DR ) thereafter averted to the observations made in the assess ment order that the such a huge loss was clai med for the first ti me b y wa y of revised return and there is no reference to the loss in the original ROI or in the profit and loss account. It was contended that it is unbelievable that such a loss has been incurred which is omitted to be reported in the profit and loss account. It was thus contended that such o mission to claim the loss in the original return is pri ma fa cie willful to evade the transactions fro m the knowledge of the deptt. and thus the benefit of the clai m of loss claime d by filing revised return should not be granted to the assessee. The Ld. DR thereafter submitted that when the shares have sold and loss is caused to the assessee, it is unfathomable that corresponding loss / profit will not be displa yed an ywhere . It is not understandable as to how the mis match by non-reporting of loss has not surfaced in the financial state ment prepared a nd how the Statutory Auditor has not detected such huge mis matc h. The Ld. CIT- DR thus submitted that the issue needs to be looked into holistically having regard to such tell tale facts. The Ld. CIT( DR) thus submitted that the benefit of capital loss claimed in the revised ROI has been ri ghtly denied by the lower authorities and thus no interference therewith is called for. 9. We have carefully considered the rival submission. The moot question in the present case is whether the assessee is entitled in law to make an altogether new clai m of ca pital losses in the revised return which is filed within the due date prescribed under Section 139(5) of the Act but subsequent to the due date prescribed under Section 139(1) of the Act and I.T.A. No.4700/Del/2014 8 consequently whe ther the assessee is entitled to carry for ward such capital losses claimed in the revised return. The other integral issue is whether the loss clai med in the revised return meets r equire men t of S. 139(5) of the Act in the f acts of the case. 9.1 As noted above, the facts of the case are quite peculiar. The assessee, in the instant case, filed return declaring income of Rs. 4,17,005/- but choose not to clai m substantial a mount of capital loss of Rs.206,25,53,801/- in the original return of income filed under Section 139(1) of the Act. The lo ss was not reflected in the audited profit & loss account of the Assessee either. The case of the assessee was subjected to scrutiny and some inquiries were initiated by the Investigation Wing Delhi. In the course of the scrutiny assess ment, the assessee filed revised return under S. 139(5) after a lapse of nearly 17 months and put forward a clai m towards incurring staggering Long Ter m Capital Loss(LTC L) of Rs. 206.25 cr. and also clai med a carr y forward thereof for set off against the income that ma y arise in the subsequent assessment years . The Assessing Officer denied the claim of such capital losses while fra ming assessment. The AO observed that the return claiming the carry for war d of losses must be filed wi thin the due date prescribed under Section 139(1) of the Act to clai m the benefit of carry forward and set off of losses in terms of Sections 72, 73, 73A and 74 of the Act . It was observed that Section 80 r.w. Se ction 139(1) and 139(3) of the Act, the return filed under Section 139(5) making new clai m towards losses thus does not stand on the same pedestal as the losses claimed in the return filed under Section 139(1) of the I.T.A. No.4700/Del/2014 9 Act. The AO con cluded that in view of S. 139(3), the capital loss can not be carried forward unless the return showing such loss is filed under S. 139(5) of the Act, whereas the Assessee has not claimed such loss in the ROI filed under S. 13 9(1) of the Act and made an altogether fresh clai m toward capital losses in the revised ROI filed under S. 139(5) of the Act. A reference was made to Section 80 of the Act which postulates that such loss cannot be carried forward unless determined under S. 139(3) which section in turn refers to S. 139(1) of the Act. In essence, the AO held that the belated clai m of capital losses in the revised return is not per missible to be carried forward under S. 74 of the Act. The CIT( A) endorsed the action of the AO without any de mur . 9.2 In this backdrop, before we proceed to deal with the issue, it ma y be releva nt to capsulate the provisions relevant for deter mining the issue. Section 139(1) postulates that the assessee is required to furnish a return of income on or before the due date for the previous year in the for m prescribed and duly verified by t he assessee. Section 139(3) prescribes that if an assessee has sustained a loss in any previous yea r under the head ‘profits and gains of business or profession’ or under the head ‘capital gains’ clai med that such losses or any p art thereof should be carry fo rward for set off under Sections 72 to 74A, he is under obligation to furnish the return within the time allowed under Section 139(1) of the Act. Section 139(5) on the other hand deals with revised return and states that if any person having furnished a return under Section 139(1) or sub section 4 of the Act discovers any omission or any wrong statement I.T.A. No.4700/Del/2014 10 therein, he ma y f urnish a revised return at any ti me before the expiry of one year fro m the end of the relevant assessment year or before the co mpletion of the assess ment whichever is earlier. Section 80 which begins with non-obstante clause, unequivocally la ys down that to get the benefit of carr y for ward of loss pertaining to Capital Gains, the return of loss has to be filed within the time allowed under S. 139(1). 10. Thus, a bare readi ng of these provisions gives an infallible i mpression that to be entitled to carr y forward the business loss or capital loss, the assessee is required to file the return under Section 139(1) of the Act . Sectio n 80 of the Act b y a non obstante clause prohibits claim of c arr y forwa rd of s uch losses unless deter mined under S. 139(3) of the Act. Section 139(3) in turn, makes the mandate of the law clear that the loss return must be filed wit hin time li mit per missible under s. 139(1) of the Act. The revision of return under S. 139(5) is also circu mscribed by expression discovers any omission or any wrong statement in the original return. 11. In the instant case, the original return filed under S. 139(1) does not make ref erence to existence of any capital loss at all. The loss has been claimed for the first ti me in the revised ROI beyond the ti me limit prescribed under S. 139(1) of the Act. The provision of S. 80 thus co mes into pla y. The la w codif ied thus is plain and concrete and does not ad mit of any a mbi guity. The revenue authorities, in our view, ha ve thus rightly held that the capital loss claimed beyond the time li mit under S. 139(1) thus can not be carried forward under S. 74 of the Act in the factual I.T.A. No.4700/Del/2014 11 matrix. We do not find an y r eason to think differently. 11. At this juncture, we also take note of the the judg ment of the Hon’ble Allahabad High Court in Dhampur Sugar Mills Ltd. (supra) referred on behalf of the Assessee. However i n that case, the Hon’ble Allahabad High Court itself observed as under: “ T h e r e i s a d i s t i n c t i o n b e t w e e n a r e v i s e d r e t u r n a nd a c o r r e c t i o n o f t h e r e t u r n . I f t h e a s s e s s e e f i l e s s o m e a p p l i c a t io n f o r c o r r e c t i n g a r e t u r n a l r e a d y f i l e d o r m a k i n g a m e n d s t h e r e i n , i t w o u l d n o t m e a n t h a t h e h a s f i l e d a r e v i s e d r e t u r n . I t w i l l s ti l l r e t a i n t h e c h a r a c t e r o f a n o r i g i n a l r e t u r n , b u t o n c e a r e v i s e d r e t u r n i s f i l e d , t h e o r i g i n a l r e t u r n m u s t b e t a k e n t o h a v e b e e n w i t hd r a w a l a n d t o h a v e b e e n s u b s t i t u t e d b y a f r e s h r e t u r n f o r t h e p u rp o s e o f a s s e s s m e n t . T h e s a m e v i e w h a s b e e n t a k e n i n G o p a l d as P a r s h o t t a m d a s v . C o m m i s s i o n e r o f I n c o m e T a x . ” Thus, a case before the Hon’ble Allahabad High Court was quite different. It mere ly sa ys that the earlier return after filing a revised return cannot form the basis of the assessme nt. Also a mer e correction of return without filing a revised return will not tanta mount to withdrawal of the original return and its substitution of a fresh return. In the instant case, an altogether fresh claim of ca pital loss has been made in the revised return filed beyond 139(1) time li mit. It is not a case of mere correction or modification in the existing claim of capital loss. The capital loss clai med when seen qua revised return filed under s. 139(5), the clai m of carr y forward thereof, c learl y does not pass the muster of la w. 12. A refer ence has also been made to t he judg ment of Ho n’ble Gujarat High Court in PCIT vs. Babubhai Ramanbhai Patel (supra). On a reading of the judgment, it is gathered that the reference has been made to Sections 139(1), 139(3) and 139(5) I.T.A. No.4700/Del/2014 12 only while granting relief to the assessee for raising claim for carr y forwa rd of s peculation loss made b y wa y of rev ised return but not raised in the original return. Significantly, Se ction 80 of the Act which seeks to place statutory e mbargo upon the assessee for eligibility of carr y for ward of losses raised beyond the due date under S. 139(1) has not been presented for the consideration of the Hon’ble Hig h Court at all. Thus, the reliance upon such judg ment ren dered without reference to Section 80 of the Act, which is pivotal to the controversy, is of no mo ment and the observations ma de therein cannot be applied in the facts of the case. 13. We thus see no error in the action of the revenue in denial of carr y- forward of c apital losses clai med in the revised return. 14. There is another aspect to the matter. As noted, Section 139(5) permits an assessee to file a revised return only if he discovers any omission or any wrong statement in the original return filed by him. 14.1 On facts , it is clearly discern ible fro m the records that the impugned capital loss was not reported in the audited financial stateme nt at all. The pro fit & loss account does not make an y referenc e to such loss at all. It is not known as to how the loss has been accounted for in the books. In the course of hearing, a specific question was put to the Ld. Counsel of the assessee on this aspect to which he drew blank. The Ld . Counsel mer el y ref erred to co mparative Investment figure. No bank state ment was submitted for perusal of the bench to understand I.T.A. No.4700/Del/2014 13 the transactions resulting in such huge losses. The loss claimed to have resulted but not reported appears incomprehe nsible from the perspective of rudimentar y pri nciples of accounting. Even the basic details of nature of capital loss and how such loss has been deter mined are not placed despite pointed query. To reiterate, how and where the accounting entries in this regard has been made in the financial state ment is totally unknown. How an inadvertent omission to account for such whopping losses has resulted, is not answered despite specific opportunity. The propriety of such capital loss itself is thus under cloud. In the circumstances noted above, it is quite difficult to affir m that the omission or wrongful statement in the original return towards such colossal loss is sheer inadvertence and not deliberate or willful. Such clai m o f loss in the revised return without showing inadvertence even at the stage of second appeal thus has been rightly denied. 14.2 A ref erence to the judg ment rendere d in the case of Kumar Jagdish Chandra Sinha vs. CIT 220 ITR 67(SC) is quite apt to the facts of the case where was held that revised return can not be filed to cover up deliberate omission etc. in the original return. Thus, from this perspective also, phraseology of S. 139(5) does not per mit clai m of capital loss by wa y of a revised return. The clai m of the Assessee towards incurring i mpugned capital losss and carr y- forward there of fails on this count too. 15. At t hi s j unc tu re , w e ma y h ast en to a d d th at Sec ti on 25 4 of th e Act d ef ine s th e po wer s of t h e T ri bu na l i n wide st po ss ib le ter ms . W her e it i s f oun d th at a no n-t ax ab le i te m is tax ed or a I.T.A. No.4700/Del/2014 14 per mi ss ib le d ed uct ion i s de ni ed , t he re is n o rea so n t o p re ve nt ass es se e f ro m ra is i ng gr ie va nc e b ef or e t he T ri bu nal i n t his r eg ar d. In th e s i mil ar va in , t he IT AT i s un de r s ol e mn du t y to s et th e f ac ts rig ht a nd in p er s pec ti ve t o d ete r mine the co rre ct posi ti on of tax ab il it y on a gi v en i ss ue. T he nat ure of tra nsa ct io ns und er tak en and me th od of a cco un ti ng t he re of , tran sf er of f und s in t hi s con ne ct io n etc . gi v ing r is e to so c al le d c ap it al loss es i s int eg ra l t o det er mi ne t he i ss ue wit h ref er en ce t o s . 13 9( 5) of th e Ac t. The I TA T can v ent ur e i nt o ex a mi na ti on of s uc h a n i nt egr al l y co nn ec ted cr it ic al asp ec t of th e mat t er t o d ete r min e t h e ch ar act er of tra n sac ti on s a s wel l as q uan tif i cat i on of l os s. T hi s vi ew is f ort if ie d b y t he de ci si on of th e Ho n’ bl e Kar nat ak a Hi gh C ou rt i n t he c as e of Fi de li ty Bu si ne ss ser vi ce s In di a Pv t. Lt d. v s. A CI T (20 18 ) 95 t ax ma nn.c om 2 53 (Ka r. ). Si mil ar v ie w ha s be en ex pr es se d b y t he H on’ bl e De lhi Hi g h Co urt i n the c ase of CI T v s. Ja ns am pa rk A dve r tis in g an d Ma rke ti ng Pv t. Lt d. (20 15 ) 5 6 ta xm an n. co m 28 6 (D el . ). Th e Ho n’ bl e De lh i Hi gh C ou rt i n thi s ca se o bs er ve d tha t w her e th e AO f aile d to d i sch ar ge i ts obl ig at io n to c on d uct a p ro pe r i nq ui r y t o ta ke t he matt e r t o lo gi cal con cl us io n, i t is a l so t he o bli ga ti on o f the f irst a pp el lat e aut ho ri t y and in de ed t ha t of ITA T t o ha ve e ns ure d t hat ef f ecti ve inq ui r y i s car ri ed ou t o n t he su bje ct ma tt er of a ppe al . Li ke wis e, t he Ho n’ ble Bo mb a y H ig h Co u rt in I TO (TD S ) v s. T hyr oc ar e Te ch nol og y Lt d. (Bo m ) In co me Ta x App ea l N o. 53 of 20 16 & Or s. ju dg me nt d ated 11. 09 .2 01 7 a ls o s i mi la rl y o bs er ved tha t o nc e t he T rib un al wa s obl ig ed in l aw to exa mi ne the ma t ter an d re -a pp rec iate all th e f actu al mat er ial s, the n it sh ou ld hav e pe rf or me d tha t du t y sat isf a cto ri l y a nd in te r ms of p ow e rs co nf err ed b y l aw. Th e Aur an ga ba d Be nc h of th e Ho n’ ble B o mb a y Hi gh C ou rt in t he ca se of CI T vs . Ch al is ga on Peo pl e’s Co -o p. B ank Lt d. ( Ta x Ap p eal No. 31 of 2005 & Or s. j ud g ment dat ed 2 3. 03 . 20 15) h as a ls o un d erl in ed t he I.T.A. No.4700/Del/2014 15 nee d f o r a pp ro pr ia t e e nq ui r y o n t he f a ctu al a spe ct s to d et er min e th e iss ue . I t o bs er ve d tha t i t w as ob li ga to r y on th e part of f act f in di ng aut ho ri ti es to mak e in qu ir y a n d a rr iv e at a f in di ng. 15. 2 The A ss es se e h as f ail ed to f urn is h an y ex pl anati on w ha ts oev er on t he na tu re a nd c har ac ter of tran sa ct ion s re su lt in g in s u ch ca pi ta l los s. An un su bs ta n tia te d a nd u nc or ro bor at ed cla i m is t hu s, i n a n y cas e, un te na bl e i n l aw. H en ce, o n t hi s sco re to o, the cla i m d oe s n ot mee t th e in gre di en t s of pr ov is io ns of S . 1 39 (5 ) of th e Ac t. 16. Ground No.1 of the appeal of the assessee is thus dismissed. 17. Grounds No.2 and 3 of the appeal of the assessee concerns disallowance of interest/financial charges to the extent a mounting to Rs.26,44,176/-. In the course of the assessment, the Assessing Officer inter alia noticed that the assessee has earned interest inco me on fixed deposits with ICICI bank to the tune of Rs.31,85,254/- and clai med interest expenditure a mounting to Rs.26,03,379/- arising fro m loans. The net interest income of Rs .5,41,078/- was declared under the head ‘inco me fro m other sources’. The Assessing Officer denied the adjust ment of interest expenses against the interest income earned on fixed deposits on the ground that interest expenses have not been incurred wholly and exclusively for th e purposes of earning the interest on fixed deposits as provided under Section 57 of the Act. The Assessing Officer inter alia observed that the cash flow state ment furni shed by the assessee proves that interest expenses were incurre d for the loans taken by it I.T.A. No.4700/Del/2014 16 which was utilized for making invest ment in shares of NDTV Ltd. and hence it has nothing to do with the earning of interest income which was earned subsequently on fixed deposits made out of sale proceeds by a part of investment in shares. The Assessing Officer thus added Rs. 26,44,176/- to the total income of the assessee. 18. In the first appeal, the CIT( A) not ed distinction between the scope of Section 57(iii) vis-à-vis Section 37(1) of the Act and found the action of the Assessing Officer to be in confor mit y with the provisions of the Act. The CIT(A) thus denied any relief t o the assessee on this score. 19. Before the Tribunal, the ld. counsel has me rel y reiter ated its contentions placed before the lower authorities without showing any nexus between the interest earned and corresponding interest expenditure as observed. The Revenue on the other hand has clearly recorde d a finding of fact that the interest expenditure has not given rise to the corresponding interest income . The interest income has arisen independently out of fixed deposits fixed with bank, the source of which in turn is sale of invest ments. The interest expenditure on the other hand has been incurred on borrowers utilized for invest ment in acquisition of shares of NDTV Ltd. Thus, apparently the assessee has failed to discharge the onus which lays upon it to show that incurring of expenditure has resulted in corresponding income taxable under the head ‘inco me fro m other sources’. In the absence of any live nexus between the expenditure and the corresponding inco me, the Revenue Authorities have rightly disallowed the clai m of interest expenses having regard to the I.T.A. No.4700/Del/2014 17 narrower scope of deductions eligible under Section 57(iii) of the Act. We thus decline to interfere with the action of the Assessing Officer and the First Appellate Authority. 20. In the result, Grounds No.2 and 3 of the appeal of the assessee are dis mi ssed. 21. In the result, t he appeal of the Assessee is dismissed. Order pronounced in the open Court on 22 /06/2023. Sd/- Sd/- [CHALLA NAGENDRA PRASAD] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/06/2023 Prabhat / Pooja Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar Date 1. Draft dictated on 2. Draft placed before author 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File comes back to PS/Sr. PS 8. Uploaded on 9. File sent to the Bench Clerk 10. Date on which file goes to the AR 11. Date on which file goes to the Head Clerk. 12. Date of dispatch of Order.