Shri Deepak M. Maliwal, Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-6(1), Ahmedabad

ITA 55/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8173 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 06-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Salary income; Revised return; Capital expenditure
• Section: 44AD; 56

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD OLHE VGEN] OLHE VGEN] OLHE VGEN] OLHE VGEN] YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.55/AHD/2017 ( / ASSESSMENT YEAR : 2013-14) DEEPAK M. MALIWAL, 5, SAMARTH APPT., OPP. STATE BANK OF HYDERABAD, MANINAGAR, AHMEDABAD. / VS. DCIT, CIRCLE 6(1), AHMEDABAD. ./ ./ PAN/GIR NO. : ALOPM 5900 G ( / APPELLANT ) .. ( !' / RESPONDENT ) # / APPELLANT BY : WRITTEN SUBMISSION !' $ # / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. % &' $ () / DATE OF HEARING 25/05/2018 *+,- $ () / DATE OF PRONOUNCEMENT 29/05/2018 . / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-6, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)- 6/285/15-16 DATED 27/10/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') DATED 28/01/2016 RELEVANT TO ASSESSMENT YEAR (AY) 2013-14. ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 2 - 2. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEA L ARE AS UNDER: 1. YOUR APPELLANT BEING AGGRIEVED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, AHMEDABAD PRESENTS THIS APP EAL AGAINST THE SAME ON THE FOLLOWING AMONGST OTHER GRO UNDS. 2. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6 IS BAD IN LAW AND CONTRARY TO THE PROVI SIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) - 6 HA S GROSSLY ERRED IN CONFIRMING ADDITION OF RS.2,56,287/- TO THE INTE REST INCOME IN INCOME FROM OTHER SOURCES. 4. YOUR APPELLANT CRAVES, LEAVE TO ADD, ALTER AND/ OR AMEND ALL OR ANY OF THE GROUND BEFORE THE FINAL HEARING. 3. AT THE TIME OF HEARING NEITHER ANYBODY APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT PETITION FILED. HOWEVE R, IT WAS OBSERVED THAT THE ASSESSEE HAS FILED A WRITTEN SUBMISSION IN SUPPORT OF HIS GROUND OF APPEAL VIDE LETTER DATED 21-05-2018. THEREFORE, WE DECIDED TO PROCEED FOR HEARING THE APPEAL IN THE PRESENCE OF LD. DR. 4. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IS THA T LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR RS.2,56, 287/- ON ACCOUNT OF THE INTEREST INCOME. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND DERIVING HIS INCOME FROM SALARY AND INTEREST. THE ASSESSEE DURING THE YEAR HAS EARNED INTEREST INCOME OF RS. 3 ,95,753/- ON THE FIXED DEPOSITS MADE WITH GUJARAT MERCANTILE CO-OP BANK AN D STATE BANK OF HYDERABAD. THE ASSESSEE DECLARED SUCH INTEREST INCO ME UNDER THE HEAD INCOME FROM THE BUSINESS AND PROFESSION IN THE INCO ME TAX RETURN, WHICH ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 3 - WAS REVISED DURING THE ASSESSMENT PROCEEDINGS AND A CCORDINGLY, SAME WAS DECLARED UNDER THE HEAD INCOME FROM OTHER SOURC ES. THE ASSESSEE IN HIS REVISED COMPUTATION OF INCOME CLAIMED INTEREST EXPENSES OF RS. 2,20,202/- AND DEPRECIATION ALLOWANCE OF RS.36,085/ - AGAINST THE SUCH INTEREST INCOME. HOWEVER, THE AO DISALLOWED THE INTEREST EXPENSES A ND DEPRECIATION ALLOWANCE CLAIMED BY THE ASSESSEE AGAINST INTEREST INCOME ON THE GROUND THAT THE ASSESSEE CANNOT CLAIM SUCH DEDUCTION WITHO UT FILING THE REVISED RETURN OF INCOME. THUS, THE AO DISALLOWED THE INTER EST EXPENSES OF RS.2,20,202/- AND DEPRECIATION ALLOWANCE OF RS.36,0 85/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) CLAIMED THAT NO ADDITIONAL DEDUCTION WAS CLAIMED BY HIM DURING THE ASSESSMENT PROCEEDING S. THE ASSESSEE HAS JUST CHANGED HEAD OF INCOME FROM BUSINESS AND PROFE SSION TO INCOME FROM OTHER SOURCES. ALL THE DEDUCTIONS CLAIMED AGAI NST INTEREST INCOME WERE ALSO CLAIMED WHEN INTEREST INCOME WAS DECLARED UNDER THE HEAD BUSINESS AND PROFESSION. THEREFORE, THE FINDING OF THE AO THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEDUCTION WITHOUT F ILING THE REVISED RETURN OF INCOME IS WITHOUT ANY BASIS. THE ASSESSEE ALSO CLAIMED THAT THE OVERDRAFT FACILI TY WAS AVAILED AGAINST THE FIXED DEPOSITS MADE WITH THE BANKS AS DISCUSSED ABOVE. THEREFORE, THE INTEREST EXPENDITURE INCURRED ON SUCH OVERDRAFT IS DIRECTLY RELATED WITH THE ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 4 - INCOME ON THE FIXED DEPOSITS. THEREFORE, THE ASSESS EE IS VERY MUCH ELIGIBLE FOR DEDUCTION ON ACCOUNT OF INTEREST EXPEN SES AGAINST THE INTEREST INCOME. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF T HE ASSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION OF THE APPELLANT. IT IS SEEN THAT THE AP PELLANT WRONGLY DECLARED INCOME U/S. 44AD OF THE ACT WHICH WAS REVI SED BEFORE THE AO. THE REVISED INCOME WAS SHOWN AS INCOME FROM OTHER S OURCES OUT OF WHICH THE APPELLANT CLAIMED INTEREST EXPENSES OF RS .2,20,202/- AND DEPRECIATION OF RS.36,085/-. THE APPELLANT CLAIMED INTEREST PAYMENT ON OVERDRAFT OF RS.2,20,202/-AGAINST INTEREST INCOME F ROM FD HOWEVER THE APPELLANT UTILIZED THE OVERDRAFT FOR PERSONAL PURPO SE. THUS THE INTEREST ON OVERDRAFT WAS NOT AT ALL USED FOR EARNING INTERE ST INCOME EARNED OUT OF FD. THEREFORE IT CANNOT BE SAID THAT THE INTERES T EXPENSES WAS INCURRED FOR EARNING INTEREST INCOME FROM THE FD DE POSIT. AS PER THE PROVISIONS OF SECTION 57(3) EXPENDITURE LAID OUT OR INCURRED WHOLLY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME AND NO T BEING IN THE NATURE OF CAPITAL AND PERSONAL EXPENDITURE IS ONLY ALLOWED. SINCE THE INTEREST EXPENDITURE ON OVERDRAFT DOES NOT FALL INT O THIS CATEGORY THEREFORE THE AO IS JUSTIFIED IN DISALLOWING THE SA ME. 7.1 BESIDE THIS THE APPELLANT HAS ALSO CLAIMED DEPR ECIATION OF RS.36,085/- AGAINST INTEREST, INCOME HOWEVER THE SA ME IS ALSO NOT ALLOWABLE IN VIEW OF THE PROVISIONS OF SECTION 57(3 ) OF THE ACT HENCE THE AO IS JUSTIFIED IN DISALLOWING THE SAME. THE GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) ASSE SSEE IS IN SECOND APPEAL BEFORE US. THE ASSESSEE IN HIS RETURN SUBMIS SION HAS SUBMITTED AS UNDER: ARGUMENTS OF THE APPELLANT: IT IS SUBMITTED THAT ALL THE FIXED DEPOSITS WITH TH E BANKS ARE OUT OF CAPITAL AND INTEREST FREE LOANS-AS PER BALANCE SHEE T ATTACHED. ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 5 - INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' I S THE INTEREST FROM FIXED DEPOSITS ONLY. FIXED DEPOSITS WITH BANKS ARE FOR FIXED DURATION OF TIME LIKE ONE YEAR, TWO YEARS, FIVE YEARS ETC. WHEN THE APPELLANT NEEDS FUNDS FOR PERSONAL PURPOSE OR PERSONAL INVESTMENTS, IT IS NOT PRACTICALLY POSSIBLE FOR HIM TO GO TO BANK FOR PREMATURITY OF THE FIXED DEPOSITS, TAKE AND USE SOM E MONEY FOR REPAYMENT OF INTEREST FREE, PERSONAL USE OUT OF SUC H PREMATURITY OF FIXED DEPOSIT AND MAKE FIXED DEPOSITS FOR THE REMAI NING AMOUNT. IT IS FURTHER NOT PRACTICALLY POSSIBLE FOR HIM, WHEN HE G ETS SOME FUNDS IDLE THEN GO TO BANK AND MAKE FIXED DEPOSIT FOR THE FIXE D TENURE. AGAIN, SAY AFTER ONE MONTH, WHEN HE NEEDS SOME MONEY THEN GO T O BANK, BREAK THE FIXED DEPOSIT, TAKE AND USE SOME MONEY OUT OF SUCH PREMATURE DEPOSITS AND MAKE FIXED DEPOSIT FOR THE REMAINING AMOUNT. EXAMPLE: ON 01.04.2012 FIXED DEPOSIT OF RS.5,00,000 MADE WIT H BANK FOR 12 MONTHS. ON 15.06.2012, THE DEPOSITOR NEEDS 50,000. THEN HE HAS TO PREMATURE THE FIXED DEPOSIT OF RS.5,00,000, TAKE OU T 50,000 FROM THE PREMATURE AMOUNT AND MAKE NEW DEPOSIT OF RS.4,50,00 0. WHEN ON 31.07.2012 HE HAS 30,000 FROM SALARY INCOME THEN AG AIN HE HAS TO MAKE THE DEPOSIT OF 30,000. WHEN ON 31.08.2012, HE NEEDS 15,000 THEN AGAIN THE ABOVE PROCEDURE NEED TO BE FOLLOWED AND S O ON BANKS CHARGE PENALTY FOR PREMATURITY OF FIXED DEPOSITS SUFFERING EXTRA MONETARY LOSS TO THE DEPOSITORS. TO RESOLVE THE ABOVE SITUATIONS, THE APPELLANT TOOK OVERDRAFT LIMITS AGAINST THE FIXED DEPOSITS AND USED THE FUNDS WHENE VER NEEDED AND RE- DEPOSITED THE EXTRA FUNDS IN SUCH OVERDRAFT ACCOUNT AND EARNED THE MAXIMUM NET INTEREST [INTEREST ON FD LESS INTEREST PAID ON OVERDRAFT]. IT IS SUBMITTED THAT THE EARNING OF INTEREST FROM F IXED DEPOSIT AND PAYING OF INTEREST ON OVERDRAFT ARE BONDED TO EACH OTHER AND CONSIDERED AS PAYMENT OF INTEREST TO EARN INTEREST INCOME ONLY AND NO PART OF THE PAYMENT BE DISALLOWED FOR PAYMENT OF IN TEREST ON OVERDRAFT AGAINST FIXED DEPOSITS . ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 6 - PRAYER OF THE APPELLANT: THE APPELLANT PREYS TO ALLOW INTEREST PAYMENT OF RS .2,20,202/- BEING PAID ON OVERDRAFT AGAINST FIXED DEPOSITS. THE APPELLANT WITHDRAWS THE GROUND OF RS.36,085/- B EING DEPRECIATION AND OTHER EXPENSES OUT OF TOTAL DISALLOWANCE RS.2,5 6,287/- THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHOR ITIES BELOW. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. THE ASSESSEE DURING THE YEAR HAS EARNED INT EREST INCOME FOR RS. 3,95,753/- ON THE FIXED DEPOSITS. THE ASSESSEE AGAI NST SUCH FIXED DEPOSITS HAS AVAILED OVERDRAFT FACILITY. THUS, THE ASSESSEE WAS UTILIZING THE OVERDRAFT FACILITY FOR HIS NEEDS AS AND WHEN REQUIR ED. ACCORDINGLY, THE ASSESSEE ON SUCH OVERDRAFT FACILITY INCURRED INTERE ST EXPENSES OF RS.2,20,202/- ONLY. THE CLAIM OF THE ASSESSEE IS TH AT SUCH INTEREST EXPENSES ON OVERDRAFT FACILITY SHOULD BE ALLOWED AS DEDUCTION AGAINST THE INTEREST INCOME EARNED ON THE FIXED DEPOSITS AS DIS CUSSED ABOVE. 8. IT IS UNDISPUTED FACTS THAT THE ASSESSEE HAS EAR NED INTEREST INCOME ON FIXED DEPOSITS, WHICH IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES U/S 56 OF THE ACT. THE ASSESSEE AGAIN ST SUCH INCOME CAN CLAIM THE DEDUCTION OF THE EXPENSES AS SPECIFIED UN DER SECTION 57 OF THE ACT, WHICH READS AS UNDER: DEDUCTIONS. 50 57. THE INCOME CHARGEABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' SHALL BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAMELY : ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 7 - (I) XXXXXXXXXXXX 54 [(IA) XXXXXXXXXXXXX (II) XXXXXXXXXXXXXXXXX 58 [(IIA)XXXXXXXXXXXXXXXXXXXXX (III) ANY OTHER EXPENDITURE (NOT BEING IN THE NATUR E OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURP OSE 60 OF MAKING OR EARNING SUCH INCOME; A PLAIN READING OF ABOVE PROVISION, REVEALS THAT TH E ASSESSEE IS ENTITLED TO CLAIM ONLY THOSE EXPENDITURE, WHICH HAVE BEEN INCUR RED IN CONNECTION WITH THE EARNING OF SUCH INCOME. HOWEVER, ON PERUSA L OF THE FACTS OF THE CASE ON HAND, WE NOTE THAT THE INTEREST EXPENSES ON OVERDRAFT FACILITY THOUGH TAKEN AGAINST FIXED DEPOSITS HAVE NOT BEEN I NCURRED IN THE EARNING OF SUCH INTEREST INCOME. THEREFORE, IN OUR CONSIDER ED VIEW, THE SAME CANNOT BE ALLOWED AS DEDUCTION AGAINST THE INTEREST INCOME ON FIXED DEPOSITS U/S 57 OF THE ACT. 9. NOW COMING TO THE DEDUCTION FOR THE DEPRECIATION CLAIMED BY THE ASSESSEE FOR RS.36,085/- AGAINST SUCH INTEREST INCO ME ON FIXED DEPOSITS, WE FIND THAT THE ASSESSEE IN HIS RETURN SUBMISSION HAS WITHDRAWN ITS CLAIM OF DEPRECIATION THEREFORE, WE DO NOT FIND ANY REASO N TO ADJUDICATE THE SAME. HENCE, THE DEDUCTION CLAIMED BY THE ASSESSEE FOR THE DEPRECIATION OF RS.36,085/- AGAINST INTEREST INCOME IS DISMISSED . IN VIEW OF ABOVE WE HOLD THAT THE INTEREST EXPENSES ON SUCH OVERDRAFT FACILITY HAS NOT BEEN INCURRED FOR THE EARNING OF S UCH INTEREST INCOME ON ITA NO.55/AHD/2017 DEEPAK M. MALIWA L VS. DCIT ASST.YEAR 2013-14 - 8 - THE FIXED DEPOSITS THUS, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF LOWER AUTHORITIES HENCE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED.. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/05/2018 SD/- SD/- JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/05/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. /01( % 2( / CONCERNED CIT 4. % 2( ( ) / THE CIT(A)-6, AHMEDABAD. 5. 567 !(&01 , ) 01- , 8 / / DR, ITAT, AHMEDABAD 6. 79 :' / GUARD FILE. % & / BY ORDER, ' 5( !( //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 28/05/2018 (DICTATION-PAD 4 PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/05/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29/05/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDE