Satpal Singh, Yamunanagar V. DCIT, Yamunanagar

ITA 501/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9976 (ITAT-CHANDIGARH)
• Duration Of Justice: 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Business income; Salary income; Charitable institution; Rule of consistency
• Section: 143(3); 56; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 501/CHD/2016 ASSESSMENT YEAR : 2009-10 SHRI SATPAL SINGH, VS THE DCIT, C/O M/S HARYANA KASHMIR CIRCLE, TRANSPORT CARRIERS, YAMUNA NAGAR. SAHARANPUR ROAD, TRUCK ADDA, YAMUNA NAGAR. PAN: AVWPS0436M & ITA NO. 502/CHD/2016 ASSESSMENT YEAR : 2010-11 SHRI SATPAL SINGH, VS THE ITO, C/O M/S HARYANA KASHMIR WARD - 4, TRANSPORT CARRIERS, YAMUNA NAGAR. SAHARANPUR ROAD, TRUCK ADDA, YAMUNA NAGAR. PAN: AVWPS0436M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOEL, CA RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 16.05.2016 DATE OF PRONOUNCEMENT : 18.05.2016 O R D E R BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS), PANCHKULA DAT ED 17.02.2016 FOR ASSESSMENT YEARS 2009-10 AND 2010-11 . 2 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. BOTH T HE PARTIES MAINLY ARGUED IN ASSESSMENT YEAR 2009-10. ( ASSESSMENT YEAR 2009-10 ) 3. IN THIS APPEAL, THE ASSESSEE CHALLENGED THE ORDE R OF LD. CIT(APPEALS) IN CONFIRMING DISALLOWANCE OF RS. 4,84,200/- BEING INTEREST PAID ON BORROWED FUND S AND CLAIMED DEDUCTION UNDER SECTION 57 OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNER IN M/S HARYANA KASHMIR TRANSPORT CARRIERS A ND M/S YAMUNA COAL COMPANY, HAVING INCOME FROM SALARY AND INTEREST OF RS. 11,85,276/- BESIDES EXEMPT INCO ME FROM PARTNERSHIP FIRM. THE ASSESSING OFFICER COMPL ETED THE ASSESSMENT UNDER SECTION 143(3) OF INCOME TAX A CT AFTER DISALLOWING THE CLAIM OF DEDUCTION OF RS. 4,99,200/- UNDER SECTION 57 OF THE ACT. 5. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS DECLARED LOSS OF RS.4,84,200/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LOSS HAS BEEN SET OFF AGAINST THE BUSINESS INCOME FROM PARTNERSHIP FIRMS OF RS. 11,85,276/-. THE ASSESSEE WAS REQUIRED TO EXPLAIN NATURE AND ALSO FURNISH THE DET AILS OF EXPENSES CLAIMED AS DEDUCTION U/S 57 OF RS.4,99,200/-. THE ASSESSEE SUBMITTED THAT INTEREST WAS PAID TO SH. UMESH SAPRA ON LOAN OF RS.40 LACS TAKEN FROM HIM ON 28.11.2007. THE AMOUNT OF UNPAID INTERE ST 3 OF RS.L,60,000/- ON SUCH LOAN FOR THE F.Y.2007-08 A LSO CREDITED TO SH. UMESH SAPRA ACCOUNT AND THUS INTERE ST OF RS.4,99,200/- ON TOTAL LOAN AMOUNT OF RS.41,60,0 00/- PAID @ 12% FOR THE F.Y, 2008-09 RELEVANT TO THE A.Y . 2009-10. ON BEING ASKED TO EXPLAIN THE UTILIZATION OF SUCH INTEREST BEARING LOAN AND ALSO DETAILS OF INCO ME IF ANY DERIVED FROM SUCH UTILIZATION THE ASSESSEE INFO RMED THAT THE SAID LOAN WAS INTRODUCED IN HIS CAPITAL AC COUNT WITH FIRM M/S HARYANA KASHMIR TRANSPORT CARRIERS, YAMUNA NAGAR. FURTHER, HIS STATEMENT OF AFFAIRS AS ON 31.03.2009 SHOWED THAT THE ASSESSEE HAD GIVEN ADVANCES TO THE PERSONS ON WHICH NO INTEREST INCOME RECEIVED AS UNDER : I) ADVANCE TO M/S BLUE BIRD BUILD. : RS.61,60,000/- WELL P. LTD. II) DEPOSITS WITH CH. LEKH RAJ : R S, 1,25,000/- EDUCATIONAL TRUST III) ADVANCES TO M/S MAJHA STONE : RS. 15,00,000/- INDUSTRIES 5(I) THE ASSESSEE ON THE ONE HAND HAS RAISED INTE REST BEARING LOANS AND HAS GIVEN INTEREST FREE LOANS ON THE OTHER HAND, THEREFORE INTEREST PAID AND CLAIMED AS DEDUCTION IS NOT ALLOWABLE TO THE EXTENT OF INTERES T CHARGEABLE ON SUCH INTEREST FREE ADVANCES. THE ASSE SSEE SUBMITTED BEFORE THE AO THAT INTEREST FREE ADVANCE WAS GIVEN TO M/S BLUE BIRD BUILD WELL P. LTD. OUT OF FU NDS RECEIVED BACK FROM M/S CH. LEKH RAJ EDUCATIONAL TRU ST. ON THE LOAN AMOUNT RAISED FROM SH. UMESH SAPRA AND 4 INTRODUCED IN THE CAPITAL ACCOUNT OF THE FIRM, THE ASSESSEE HAS NOT SUBSTANTIATE HIS VERSION BY FILING ANY DOCUMENTARY EVIDENCE. THE ASSESSEE'S CONTENTION WAS NOT CORRECT IN VIEW OF THE FACT THAT THE ASSESSEE H AS RAISED LOANS OF RS.40 LACS FORM SH. UMESH SAPRA ON 28.11.2007 THROUGH CHEQUE WHEREAS ADDITION IN HIS CAPITAL ACCOUNT IN THE BOOKS OF FIRM WAS ON DIFFERE NT DATES I.E. RS.8,00,000/- ON 12.12.2007 BY CASH, RS.27,40,000/-ON 29.01.2008, RS.2,60,000/- ON 30.01.2008 AND RS.2,33,000/- ON 05.03.2008 BY CHEQUES. THUS, THE ASSESSEE'S EXPLANATION THAT BORR OWED FUNDS WAS INTRODUCED IN THE CAPITAL ACCOUNT WAS NOT ACCEPTED BY THE AO. FURTHER, THE AO AFTER PLACING RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT I N THE CASE OF M/S MCDOWELL & CO. LTD. VS. CTO [1958] 154 ITR 148 FOUND THAT BY INCURRING MULTIPLE TRANSACTIO N, THE ASSESSEE USED A COLOURABLE DEVICE TO REDUCE ITS TAX LIABILITY. THUS, THE AO DISALLOWED THE CLAIMED DEDU CTION OF RS.4,99,200/- UNDER THE HEAD OTHER SOURCES. 6. DURING APPELLATE PROCEEDINGS, THE COUNSEL FOR TH E APPELLANT SUBMITTED THAT THE ASSESSEE HAD BUSINESS INCOME AS WELL AS INCOME FROM OTHER SOURCES; BEING INTEREST FROM BANKS. BESIDES, THE ASSESSEE PAID INT EREST ON A LOAN RAISED BY HIM FORM ONE SH. UMESH SAPRA DURING THE A.Y.2008-09 FOR THE BUSINESS PURPOSES AN D THE INTEREST SO PAID; AFTER HAVING ADJUSTED INCOME FROM OTHER SOURCES: WAS SET OFF AGAINST THE BUSINESS INC OME 5 U/S 57 OF THE ACT. THE DCIT WHILE FRAMING THE ASSESSMENT; REJECTED THE CLAIM OF INTEREST PAID BY THE ASSESSEE ON BORROWED CAPITAL AND ADDED BACK A SUM OF RS. 4,99,200/-TO THE RETURNED INCOME TERMING THE INTEREST SO PAID AS A COLOUR FULL DEVICE IN VIEW OF HON'BLE SUPREME COURT DECISION IN THE CASE OF MCDOW ELL VS. CIT THE APPELLANT FURTHER SUBMITTED THAT THE DC IT HAS WRONGLY ADDED BACK THE AFORESAID SUM TO THE TAXABLE INCOME OF THE ASSESSEE. HE HAS FAILED TO CONSIDER THE FACT THAT THE LOAN WAS RAISED BY THE ASSESSEE DURING THE A.Y. 2008-09 AND NOT DURING CURRENT YEAR. THE ASSESSEE HAD PAID INTEREST IN EAR LIER YEAR ALSO AND SH.UMESH SAPRA HAS BEEN DECLARING THE SAME IN HIS INCOME FOR THE YEARS 2008-09 AND 2009-1 0. THUS TAXING THE INTEREST IN THE HANDS OF THE ASSESS EE AGAIN SHALL AMOUNT TO DOUBLE TAXATION OF THE SAME AMOUNT I.E. IN THE HANDS OF THE ASSESSEE AS WELL AS IN THE HANDS OF SH. UMESH SAPARA. THE ASSESSEE RAISED LOANS AMOUNTING TO RS.15 LAC FROM PRIVATE PARTIES A ND WITHDREW A SUM OF RS.46.25 LACS FROM HIS DEPOSIT WI TH CH. LEKH RAJ EDUCATIONAL & CHARITABLE TRUST, YAMUNA NAGAR AND FURTHER RS.21.83 LAC FORM M/S YAMUNA COAL CO.; A PARTNERSHIP FIRM OF ASSESSEE AND OUT OF THIS TOTAL AMOUNT OF RS. 83. 08 LACS ADVANCED A SUM OF RS.61.6 0 LACS TO M/S BLUE BUILDWELL P. LTD. AND RS.15 LACS T O M/S MAJHA STONE INDUSTRIES; A PARTNERSHIP FIRM IN WHICH HE IS A PARTNER. THUS OUT OF A SUM OF RS.83.0 8 LACS ; HE INVESTED RS.76.60 LACS. THE ASSESSEE HAD 6 INTRODUCED A SUM OF RS.40.33 LACS IN THE PARTNERSHI P OF THE ASSESSEE AS HIS CAPITAL CONTRIBUTION DURING THE A.Y.2008-09 OUT OF RS.60 LACS. THE ASSESSEE HAD NEV ER INTRODUCED THE AFORESAID SUM IN THE BUSINESS ENTERPRISES YIELDING PROFITS/INCOME. FURTHER, THE APPELLANT MADE A DISTINCTION FROM THE JUDGMENT IN T HE CASE OF MCDOWELL & CO. (SUPRA) BY PLACING RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F UNION OF INDIA VS. AZADI BACHAO ANDOLAN [2003] 263 ITR 06 (SC), AND OTHERS. 7. THE LD. CIT(APPEALS), CONSIDERING THE EXPLANATIO N OF THE ASSESSEE IN THE LIGHT OF MATERIAL ON RECORD, CONFIRMED THE ADDITION ON ACCOUNT OF DISALLOWANCE O F INTEREST UNDER SECTION 57 OF THE ACT. HIS FINDINGS IN PARA 7 TO 7.2 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 7. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION OF THE APPELLANT. IT IS NOTED THAT THE APPELLANT AS PARTNER IN TWO PARTNERSHIP FIRMS HAVE EARNED REMUNERATION AND INTEREST OF RS.L 1,85,276/- BESIDES SHARE IN PROFITS WHICH IS EXEMPT U/S 10(2A) OF THE ACT. THE APPELLANT HAS ALSO SHOWN INCOME FROM OTHER SOURCES COMPRISING SAVING BANK INTEREST OF RS.L5,000/- AND CLAIMED DEDUCTION OF RS. 4,99,200/- AS INTEREST EXPENDITURE INCURRED ON LOAN SHOWN FROM SH. UMESH SAPRA. THUS, THE APPELLANT HAS SET OFF AN AMOUNT OF RS.4,84,200/- AGAINST THE INCOME UNDER THE HEAD BUSINESS & PROFESSION. THE AO ON 7 EXAMINATION OF APPELLANT'S STATEMENT OF S ON 31.03.2009 HAVE FOUND THAT APPELLANT HAS GIVEN ADVANCES TO OTHER THREE CONCERNS ON WHICH NO INTEREST HAS BEEN CHARGED. SO, THE APPELLANT HAS CLAIMED INTEREST ON LOAN WHERE AS IT HAS PROVIDED INTEREST FREE LOANS TO OTHER CONCERNS. FURTHER, THE APPELLANT HAS EXPLAINED THAT LOAN RAISED FROM SH. UMESH SAPRA OF RS.40 LACS WAS INTRODUCED AS CAPITAL IN THE FIRM. THE AO HAS NOT ACCEPTED THE APPELLANT'S CONTENTION ON FINDING THAT THE LOAN WAS RAISED THROUGH CHEQUE ON 28.08.2007 WHEREAS THE INTRODUCTION IN CAPITAL ACCOUNT IS ON DIFFERENT DATES BY WAY OF CASH AND THREE SEPARATE CHEQUES. SO, THERE WAS NO CORRELATION THAT THE BORROWED FUND WAS INTRODUCED AS CAPITAL IN THE FIRM. THE AO CONCLUDED THAT APPELLANT INVOLVED A SERIES OF TRANSACTIONS FOR TRANSFER OF FUND FROM ONE TO ANOTHER WHICH IS MERELY A COLORABLE DEVICE FOR REDUCING THE TAX LIABILITY WHICH WAS NOT ALLOWED AFTER PLACING RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF MCDOWELL & CO. (SUPRA). ON THE OTHER HAND THE APPELLANT HAS SUBMITTED THAT LOAN WAS RAISED DURING THE PRECEDING ASSESSMENT YEAR FOR THE PURPOSE OF CONTRIBUTION TO THE CAPITAL IN THE PARTNERSHIP FIRM WHICH HAS BEEN ACCEPTED BY THE AO HIMSELF. THE APPELLANT HAS RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF AZADI BACHAO ANDOLAN (SUPRA) TO MAKE DISTINCTION FROM THE JUDGMENT IN THE CASE OF MCDOWELL & CO. (SUPRA). 7.1 AFTER CONSIDERING THE FACTS AND SUBMISSION, A REFERENCE IS MADE TO THE PROVISIONS OF SECTION 57 OF THE ACT UNDER WHICH THE APPELLANT HAS 8 CLAIMED DEDUCTION. THE DEDUCTION U/S 57(III) IS ALLOWABLE FOR ANY OTHER EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME . THE DEDUCTION IS AVAILABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AGAINST VARIOUS INCOME FROM OTHER SOURCES AS STIPULATED U/S 56 OF THE ACT. SO, THE APPELLANT HAS TO PRIMARILY FULFILL TWO CONDITIONS THAT I) THE CLAIM OF EXPENDITURE SHOULD NOT BE IN THE NATURE OF PERSONAL EXPENSES AND II) THE EXPENDITURE MUST BE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. IN THE INSTANT CASE, EVEN IF IT IS ACCEPTED THAT APPELLANT TOOK LOAN FROM SH. UMESH SAPRA BUT THE DATE OF RAISING LOAN AND THE DATES OF ADDITIONS TO CAPITAL ARE NOT CORRELATED. THE CLAIMED LOAN WAS RAISED ON 28.11.2007 THROUGH A CHEQUE WHEREAS, THE ADDITIONS TO CAPITAL ACCOUNT IN THE FIRM ARE RS.8,00,000/- BY CASH ON 12.12.2007 AND RS.27,40,000/- RS.2,60,000/- AND RS.2,33,000/- THROUGH CHEQUES ON 29.01.2008, 30.01.2008 AND 05.03.2008 RESPECTIVELY. SO, WHEN THE APPELLANT IS INVOLVED IN NUMEROUS BANKING TRANSACTIONS, THE APPELLANT HAS NOT BEEN ABLE TO JUSTIFY THAT THE SAME LOAN RAISED IN HIS PERSONAL CAPACITY CAN BE CONSIDERED AS TRANSFER TO THE CAPITAL ACCOUNT OF THE FIRM. THE DEDUCTION U/S 57 CAN ONLY BE CLAIMED AGAINST THOSE INCOMES WHICH ARE IN THE NATURE OF INCOMES LISTED U/S 56 OF THE ACT. SO, THE RELEVANCE OF THE CLAIM OF DEDUCTION IS IMPORTANT UNDER THE HEAD INCOME FROM OTHER SOURCES. THE APPELLANT HAS NEITHER UTILIZED SUCH AMOUNT FOR MAKING OR EARNING ANY INCOME NOR 9 EARNED ANY INCOME DURING THE YEAR-AS STIPULATED U/S 56 OF THE ACT. IT IS THE DUTY OF THE AO TO CONSIDER WHETHER THE ASSESSEE IS ENTITLED TO A DEDUCTION FROM INCOME FALLING U/S 56 OF THE ACT WHICH HE HAS FOUND THAT THE ALLEGED LOAN WAS NOT UTILIZED FOR EARNING ANY INCOME FALLING U/S 56 OF THE ACT. 7.2 THE APPELLANT'S RELIANCE ON THE JUDGMENTS IN VARIOUS CASES IS PRIMARILY ON THE DISCUSSION OF JUDGMENT OF MCDOWELL & CO. (SUPRA) IN THOSE CASES. HOWEVER, NONE OF THE CASES RELIED BY THE APPELLANT ARE ON THE ISSUE OF DEDUCTION OF EXPENDITURE U/S 57 AGAINST INCOME FALLING U/S 56 OF THE ACT. SO, THE CASES ARE DISTINGUISHABLE ON THE FACTS FROM THE FACTS OF THE INSTANT CASE. REGARDING THE APPELLANT'S RELIANCE IN THE CASE OF AZADI BACHAO ANDOLAN (SUPRA), IT IS NOTICED THAT THE HON'BLE SUPREME COURT HAS NOT REVERSED THE JUDGMENT IN THE CASE OF MCDOWELL & CO. THE PRINCIPLE OF COLORABLE DEVICE AS IN THE CASE OF MCDOWELL & CO. STILL HOLDS GOOD LAW. THE COLORABLE DEVICES WILL NOT BE ACCEPTED AS PART OF TAX PLANNING. THE ASSESSEE CAN PLAN ITS AFFAIR SO AS TO MINIMIZE THE TAX LIABILITY WITHIN THE FRAME WORK OF LAW. ONE INDICATION FOR DETERMINING WHETHER A COLORABLE DEVICE EXISTS IS TO ASCERTAIN WHETHER THE PLANNING CONSISTED OF SERIES OF PRE- ORDAINED STEPS THAT HAD NO COMMERCIAL OR BUSINESS PURPOSE EXCEPT TO REDUCE THE TAX BURDEN. IN THE INSTANT CASE, THE APPELLANT HAD FUNDS WHICH HAS BEEN ADVANCED TO OTHER CONCERNS WITHOUT ANY CHARGE OF INTEREST WHEREAS IT HAS CLAIMED LOAN FOR INTRODUCTION TO ITS CAPITAL ACCOUNT IN THE PARTNERSHIP FIRM ON WHICH INTEREST EXPENDITURE HAS BEEN CLAIMED UNDER THE HEAD 10 INCOME FROM OTHER SOURCES. THE EARNING FROM SUCH INTRODUCTION TO THE PARTNERSHIP FIRM DOES NOT FALL U/S 56 OF THE ACT. FURTHER, THERE IS NO CO-RELATION IN RAISING THE LOAN AND THE AMOUNTS INTRODUCED AS CAPITAL IN THE FIRM. THESE TRANSACTIONS CLEARLY ESTABLISHED THAT IT HAS BEEN DONE AS A COLORABLE DEVICE TO REDUCE ITS TAX LIABILITY. THE INTEREST INCOME IF ANY, SHOWN BY THE LOANEE IN HIS RETURN OF INCOME DOES NOT HAVE ANY BEARING ON THE CORRECT TAX LIABILITY IN THE CASE OF THE APPELLANT. SO, IN VIEW OF THE ABOVE FACTS, I AM IN AGREEMENT WITH THE AO THAT THE DEDUCTION OF RS. 4,84,200/- CLAIMED AS INTEREST EXPENDITURE U/S 57 IS NOT ALLOWABLE. THUS, THIS GROUND OF APPEAL IS DISMISSED. 8. AFTER HEARING RIVAL CONTENTIONS, I DO NOT FIND A NY MERIT IN THE APPEAL OF THE ASSESSEE. THE LD. COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT NO LOAN WAS TA KEN IN ASSESSMENT YEAR UNDER APPEAL. HE HAS SUBMITTED THAT IN PRECEDING ASSESSMENT YEAR 2008-09, ON THE SAME FACTS, ASSESSING OFFICER DID NOT MAKE ANY ADDI TION IN ASSESSMENT ORDER UNDER SECTION 143(3)/147 OF INCOME TAX ACT DATED 11.02.2016. PB-5 IS COPY OF ACCOUNT OF THE AMOUNT RECEIVED FROM SHRI UMESH SAPR A OF RS. 40 LACS IN PRECEDING ASSESSMENT YEAR 2008-09 WHICH WAS CARRIED FORWARD ALONGWITH INTEREST IN ASSESSMENT YEAR UNDER APPEAL. HE HAS SUBMITTED THA T ASSESSEE RECEIVED INTEREST FROM THE PARTNERSHIP FIR M 11 WHICH WERE DECLARED IN THE COMPUTATION OF INCOME AN D REDUCED THE INTEREST PAID TO SHRI UMESH SAPRA UNDER THE HEAD INCOME FROM OTHER SOURCES. HE HAS SUBMITTED THAT SINCE IN PRECEDING ASSESSMENT YEAR 2008-09, NO DISALLOWANCE HAVE BEEN MADE THEREFORE, THE AUTHORITIES BELOW SHOULD FOLLOW RULE OF CONSISTENCY AND RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF HARYANA TOURISM CORPORATI ON LTD. 327 ITR 26. HE HAS ALSO RELIED UPON UNREPORTE D DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS M/S RAPTAKOS BRETT & CO. LTD. DATED 29.07.2011 IN WHICH ONE OF THE SUBSTANTIAL QUESTION RAISED BY THE REVENUE WAS REGARDING OVERLOOKING OF THE PROVISIONS OF SECTION 57(III) BY THE LD. CIT(APPEALS). IN THIS JUDGEMENT, THE TRIBUNAL RECORDED THE FINDING OF FAC T THAT IF NO DISALLOWANCE OF INTEREST ON BORROWED FUN DS IS MADE IN THE YEAR IN WHICH INVESTMENTS ARE MADE, THE N THERE IS NO REASON AS TO WHY DISALLOWANCE OF INTERE ST ON BORROWED FUNDS SHOULD BE MADE IN ASSESSMENT YEAR IN QUESTION. HON'BLE HIGH COURT DID NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. 8(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS O F THE AUTHORITIES BELOW AND SUBMITTED THAT NO INTERES T HAS BEEN EARNED BY ASSESSEE AGAINST THE INTEREST INCURRED ON INCOME FROM OTHER SOURCES. THEREFORE, LD. CIT(APPEALS) CORRECTLY DISALLOWED DEDUCTION OF INTE REST UNDER SECTION 57(III) OF INCOME TAX ACT. HE HAS AL SO 12 RELIED UPON DECISION OF KERALA HIGH COURT IN THE CA SE OF CIT VS D.K.B. & CO. 243 ITR 618 IN WHICH IT WAS HEL D THAT, THERE IS NO ESTOPPEL AGAINST STATUTE. LD. DR, THEREFORE, SUBMITTED THAT SINCE NO EXPENDITURE HAS BEEN LAID OUT OR EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME I.E. INCO ME FROM OTHER SOURCES, THEREFORE, APPEAL OF THE ASSES SEE MAY BE DISMISSED. 9. I HAVE CONSIDERED RIVAL SUBMISSIONS. IT WAS FOU ND BY THE AUTHORITIES BELOW THAT ASSESSEE IS A PARTNER IN TWO PARTNERSHIP FIRMS AND EARNED SALARY AND INTERES T BESIDES SHARE IN PROFIT WHICH IS EXEMPT. THE ASSES SEE HAS ALSO SHOWN INCOME FROM OTHER SOURCES COMPRISING SAVING BANK INTERESTS OF RS. 15,000/- AND CLAIMED DEDUCTION OF RS. 4,99,200/- AS INTEREST EXPENDITURE INCURRED ON LOAN SHOWN FROM SHRI UMESH SAPRA. THE ASSESSEE HAS SET OFF AN AMOUNT OF RS. 4,84,200/- AGAINST THE INCOME UNDER THE HEAD BUSINESS AND PROFESSION. THE ASSESSING OFFICER ALSO FOUND OUT FROM THE FACTS THAT ASSESSEE HAS GIVEN ADVANCES TO OTHER THREE CONCERNS ON WHICH NO INTEREST HAS BEEN CHARGE D. IT IS, THEREFORE, CLEAR THAT ASSESSEE HAS CLAIMED I NTEREST ON LOAN WHEREAS HE HAS PROVIDED INTEREST FREE LOAN TO OTHER CONCERNS. 9(I) THE ASSESSEE EXPLAINED THAT LOAN RAISED FRO M SHRI UMESH SAPRA OF RS. 40 LACS WAS INTRODUCED AS CAPITA L IN 13 THE FIRM BUT ASSESSING OFFICER HAS NOT ACCEPTED ASSESSEE'S CONTENTION ON FINDING THAT THE LOAN WAS RAISED THROUGH CHEQUE ON 28.11.2007 WHEREAS INTRODUCTION IN THE CAPITAL ACCOUNT IS ON DIFFERENT DATES BY WAY OF CASH AND THREE SEPARATE CHEQUES. THEREFO RE, THERE WAS NO CO-RELATION FOUND BETWEEN THE BORROWED FUNDS AND AMOUNT INTRODUCED AS CAPITAL IN THE FIRM. THE ASSESSEE CLAIMED DEDUCTION OF THE IMPUGNED AMOUNT UNDER SECTION 57 OF THE INCOME TAX ACT. THE DEDUCTION UNDER SECTION 57(III) OF THE INCOME TAX A CT IS ALLOWABLE FOR ANY OTHER EXPENDITURE LAID OUT OR EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME I.E. UNDER THE HEAD INCOME FROM OTHER SOURCES. THE DEDUCTION IS, THEREFORE, ALLOWABLE UNDER THE HEAD INCOME FROM OT HER SOURCES AGAINST VARIOUS INCOMES FROM OTHER SOURCES AS MENTIONED UNDER SECTION 56 OF THE INCOME TAX ACT. THE ASSESSEE HAS FILED COMPUTATION OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL IN THE PAPER BOOK IN WHICH ASSESSEE HAS MENTIONED INCOME OF RS. 11,85,276/- BEING REMUNERATION AND INTEREST RECEIVE D FROM BOTH THE FIRMS IN WHICH ASSESSEE WAS A PARTNER AND HAS SHOWN THE SAME UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. THE ASSESSEE HAS SHOWN INTEREST PAID TO SHRI UMESH SAPRA IN A SUM OF RS. 4,99,200/- UNDER THE HEAD 'INCOME FROM OTHER SOURCE S' AND SET OFF AGAINST INTEREST INCOME OF RS. 15,000/- BEING SAVING BANK INTEREST. THEREFORE, ASSESSEE HA S 14 NOT EARNED THE INTEREST FROM TWO OF THE FIRMS AS 'I NCOME FROM OTHER SOURCES', THEREFORE, CONDITIONS OF SECTI ON 57(III) WOULD NOT BE SATISFIED IN THE PRESENT CASE. 9(II) IT MAY ALSO BE NOTED HERE THAT EVEN IF ASSESS EE TOOK LOAN FROM SHRI UMESH SAPRA BUT THE DATE OF RAI SING LOAN AND DATE OF ADDITION TO CAPITAL ACCOUNT IN THE FIRMS ARE NOT CO-RELATED. THE ASSESSEE HAS CLAIMED THAT LOAN WAS RAISED ON 28.11.2007 THROUGH CHEQUE WHEREAS, ADDITION TO CAPITAL ACCOUNT WAS MADE LATER ON, ON DIFFERENT DATES THROUGH CHEQUES AND THE CASH IN A S UM OF RS. 40,33000/-. THEREFORE, DATES AND AMOUNTS AR E TOTALLY DIFFERENT. THE ASSESSEE IS INVOLVED IN NUM BER OF BANKING TRANSACTIONS THEREFORE, ASSESSEE HAS NOT BE EN ABLE TO JUSTIFY THAT SAME LOAN WAS RAISED IN HIS PE RSONAL CAPACITY, CAN BE CONSIDERED AS TRANSFER TO THE CAPI TAL ACCOUNT OF THE FIRM. THE DEDUCTION UNDER SECTION 5 7 CAN BE CLAIMED AGAINST THOSE INCOMES WHICH ARE IN T HE NATURE OF INCOME LISTED UNDER SECTION 56 OF THE INC OME TAX ACT. THE AUTHORITIES BELOW WERE, THEREFORE, JUSTIFIED IN HOLDING THAT THE RELEVANCE OF THE CLAI M OF DEDUCTION IS IMPORTANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE ASSESSEE HAS NEITHER UTILIZED SUCH AMOUNT FOR MAKING OR EARNING ANY SUCH INCOME NOR EARNED ANY INCOME DURING THE YEAR AS STIPULATED UND ER SECTION 56 OF THE INCOME TAX ACT. 15 10. APART FROM THE ABOVE FACTS, THE ASSESSEE HAD FU NDS WHICH HAVE BEEN ADVANCED TO OTHER CONCERNS WITHOUT CHARGING ANY INTEREST, WHEREAS ASSESSEE HAS CLAIMED LOANS FOR INTRODUCTION IN THE CAPITAL ACCOUNT IN TH E PARTNERSHIP FIRM ON WHICH INTEREST EXPENDITURE HAS BEEN CLAIMED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE EARNING FROM SUCH INTRODUCTION TO TH E PARTNERSHIP FIRM HAVE BEEN ADMITTED AS INCOME FROM BUSINESS AND PROFESSION, THEREFORE, SAME WOULD NOT FALL UNDER THE PROVISIONS OF SECTION 56 OF THE ACT. THE AUTHORITIES BELOW, THEREFORE, ON PROPER APPRECIATIO N OF FACTS AND PROVISIONS OF LAW, CORRECTLY DENIED DEDUC TION UNDER SECTION 57(III) OF THE ACT. THE LD. DR RIGHT LY CONTENDED THAT THERE CANNOT BE ESTOPPEL AGAINST STATUTE. WHEN ASSESSEE WAS CLAIMING DEDUCTION UNDE R SECTION 57(III) OF THE ACT, IT IS DUTY OF THE ASSES SEE TO PROVE THAT SUCH DEDUCTION IS ALLOWABLE IN ACCORDANC E WITH LAW. THE LD. COUNSEL FOR THE ASSESSEE MERELY CONTENDED THAT SINCE IN PRECEDING ASSESSMENT YEAR 2008-09, SIMILAR DISALLOWANCE HAD NOT BEEN MADE BY ASSESSING OFFICER IN SCRUTINY ASSESSMENT, THEREFORE , ON PRINCIPLE OF CONSISTENCY, CLAIM OF ASSESSEE SHOULD NOT BE DISALLOWED. HOWEVER, THE ASSESSMENT ORDER DATED 11.02.2016, COPY OF WHICH IS FILED IN THE PAPER BOO K FOR ASSESSMENT YEAR 2008-09 SHOWS THAT ASSESSING OFFICE R HAS NOT PASSED ANY SPEAKING ORDER AND IT IS NOT CLE AR WHETHER ASSESSING OFFICER HAS CONSIDERED THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 57(III) OF THE 16 ACT. NO MATERIAL IS PRODUCED BEFORE ME TO EXPLAIN THAT ASSESSING OFFICER HAS APPLIED HIS MIND TO THE FACTS OF THE CASE FOR CONSIDERING DEDUCTION UNDER SECTION 57 (III) OF THE ACT, PARTICULARLY IN REFERENCE TO EARNING OF INCOME UNDER SECTION 56 OF THE ACT. THEREFORE, ASS ESSEE WOULD NOT GET ANY BENEFIT OUT OF THE SAME. 10(I) I MAY ALSO NOTE HERE THAT ASSESSEE HAS NOT RA ISED A POINT BEFORE AUTHORITIES BELOW OR IN GROUND OF APPE AL BEFORE THE TRIBUNAL, REGARDING SET OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER. 11. THEREFORE, CONSIDERING THE TOTALITY OF THE FACT S AND CIRCUMSTANCES NOTED ABOVE, I DO NOT FIND ANY INFIRM ITY IN THE ORDERS OF THE AUTHORITIES BELOW IN MAKING AN D CONFIRMING THE ABOVE ADDITION. I DO NOT FIND ANY M ERIT IN THE APPEAL OF THE ASSESSEE. THE SAME IS, ACCORD INGLY, DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. (ASSESSMENT YEAR : 2010-11 ) 13. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 1 REGARDING ADDITION OF RS. 1,50,000/- O N ACCOUNT OF INTEREST PAID ON HOUSING LOAN. THIS GRO UND IS, ACCORDINGLY, DISMISSED BEING NOT PRESSED. 17 14. ON GROUND NO. 2, ASSESSEE CHALLENGED THE DISALLOWANCE OF RS. 4,80,000/- BEING INTEREST PAID AND CLAIMED DEDUCTION UNDER SECTION 57 OF THE ACT. THE LD. CIT(APPEALS) FOLLOWED HIS ORDER FOR ASSESSMENT YEAR 2009-10 AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 15. LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITT ED THAT ISSUE IS SAME AS HAVE BEEN CONSIDERED IN PRECE DING ASSESSMENT YEAR 2009-10 IN WHICH I HAVE CONFIRMED T HE ORDER OF THE LD. CIT(APPEALS). FOLLOWING THE REASO NS FOR DECISION FOR ASSESSMENT YEAR 2009-10 (SUPRA), I DIS MISS THIS GROUND OF APPEAL OF THE ASSESSEE. 16. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 18 TH MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD