KANIHYALAL L MISTRY, MUMBAI V. INCOME TAX OFFICER 30(2)(1), MUMBAI

ITA 6762/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0226 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATA
• Keywords: Business income; Additional evidence; Revised return; Capital expenditure
• Section: 44AD; 143(3); 68; 148

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 6762 /MUM/201 7 , ( / ASSESSMENT YEAR: 2012 - 13 ) KANIHYALAL MISTRI A/1 - 5, K. L. MISTRY CHAWL, KHOTKUWA ROAD, MALAD EAST, MUMBAI - 400097 . / VS. ITO 30(2)(1 ) C - 10, 7 TH FLOOR, BANDRAKURLA COMPLEX, INCOME TAX, BANDRA MUMBAI - 400051 ./ ./ PAN/GIR NO. A A FPM9711M ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : MS. N. HEMALATA / DATE OF HEARING : 07 /0 2 /201 8 / DATE OF PRONOUNCEMENT : 21/02/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 4 1 , MUMBAI DATED 2 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI 24.07.17 FOR AY 20 12 - 13 O N THE GROUNDS MENTIONED HEREIN BELOW: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN AFFIRMING THE DECISION OF ASSESSING OF FICER IN MAKING THE ADDITION UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN AFFIRMING THE DECISION OF ASSESSING OFFICER FOR ASSESSING INTEREST INCOME OF RS. 5,74,481/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) ERRED IN CONFIRMING ADDITION MADE BY ASSESSING OFFICER U/S 68 AMOUNTING TO RS. 6,00,000/ - ON ACCOUNT OF UNSECURED LOAN. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY OR DELETE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2 . AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF SEVERAL CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED . ON THE OTHER HAND L D. DR IS P RESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE 3 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS ENGAGE D IN THE BUSINESS AS A BUILDER INTO DEVELOPMENT AND CONSTRUCTION OF LAND AND BUILDINGS. HE IS RUNNING A PROPRIETARY CONCERN, VIZ M/S CHANDRIKA ENTERPRISE. ASSESSEE HAD DECLARED INCOME UNDER THE HEAD HOUSE PROPERTY, BUSINESS INCOME AND INCOME FROM OTHER SOU RCES. THE ASSESSMENT U/S 143(3) OF THE I T ACT WAS COMPLETED ON 30/03/2015 AND TAX OF RS.4,44,860/ - WAS LEVIED. IT IS OBSERVED THAT THE AO HAS MADE THE FOLLOWING ADDITIONS IN THE RETURN OF INCOME TAX - (1) AN ADDITION OF RS.184267/ - ON ACCOUNT OF DISALLOWANCE OF INCOME FROM HOUSE PROPERTY , (2) DISALLOWANCE OF INTEREST INCOME OF RS.574481/ - AND (3) ADDITION U/S 68 OF UNSECURED LOAN OF RS.6 LAKHS. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES DISMISSED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE APPEAL BY RAISING THE ABOVE GROUNDS. 4 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI GROUND NO. 1 . 4 . THISGROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN AFFIRMING THE DECISION OF ASSESSING OFFICER IN MAKING THE ADDITION UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' 5. WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROU NDS RAISE D BY THE ASSESSEE IN ITS DETAILED ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CI T(A) IS CON T AINED IN PARA NO. 7 TO 9 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT IN THE LIGHT OF FINDINGS OF THE AO. IT IS OBSERVED THAT IN THE INDIVIDUAL PROFIT AND LOSS ACCOUNT THE APPELLANT HAS OFFERED RS.2,22,299/ - AND I N CHANDRIKA ENTERPRISE WHICH IS PROPRIETARY CONCERN OF THE APPELLANT RS.36,000/ - IS SHOWN AS RENTAL INCOME. 5 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI AFTER CLAIMING STANDARD DEDUCTION @ 30% OF RS. 66,690/ - , NET HOUSE PROPERTY INCOME IS SHOWN AS RS. 1,55,609/ - . APART FROM THAT, IT IS OBSERVED THAT UNDER HIS PROPRIETARY CONCERN, M/S CHANDRIKA ENTERPRISE, RENT OF RS. 36,000/ - HAS BEEN SHOWN ALONG WITH SALES TURNOVER OF RS. 30,00,000/ - AND INTEREST INCOME OF RS. 5,74,481/ - . THE NET PROFIT IN THE P & L A/C HAS BEEN WORKED AT RS. 93,058/ - . HOWEVER, IN TH E COMPUTATION OF INCOME THE APPELLANT HAS ESTIMATED PROFIT @8% OF SALES TURNOVER OF RS. 30 LAC AT RS. 2,40,000/ - . HENCE, NO ELEMENT OF RENT OF RS. 36,000/ - RECEIVED UNDER HIS PROPRIETARY CONCERN, M/S CHANDRIKA ENTERPRISE HAS BEEN OFFERED FOR TAX. MOREOVER, NO REASON HAS BEEN FURNISHED FOR NOT CONSIDERING THE RENT UNDER THE HEAD INCOME FROM HOUSE PROPERTY'. 8. APART FROM THAT, I FIND THAT IN THE WRITTEN SUBMISSION DATED 20.07.2017,THE APPELLANT HAS ALSO CONTENDED THAT AS PER HIS CALCULATION, THE GROSS RENT, AS PER ASSESSEE'S RECORD WORKS OUT TO RS. 2,58,299/ - (RS.2,22,299/ - + RS. 36,000/ - ) INSTEAD OF RS. 1,84,267/ - AS COMPUTED BY THE AO IN THE ASSESSMENT ORDER. IT APPEARS THAT THE APPELLANT HAS MISUNDERSTOOD THE NET RENT WORKED OUT BY THEAO WITH THE GROSS RE NT OFFERED BY THE APPE LLANT AT RS. 2,58,299/ - . IN THE ASSESSMENT ORDER, THE AO HAS CLEARLY MENTIONED THAT IN THE SUBMISSION BEFORE HIM, 6 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI THE GROSS RENT IS SHOWN AT RS. 2,63,239/ - IN THE SUBMISSION MADE DURING THE ASSESSMENT PROCEEDINGS. NO RECONCILIATION HA S BEEN GIVEN FOR QUOTING DIFFERENT FIGURES IN THE WRITTEN SUBMISSIONS MADE DURING ASSESSMENT & APPELLATE PROCEEDINGS. 9. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED,IN MY OPINION, THE AO HAS CORRECTLY COMPUTED THE NET RENT, A FTER APPLYING STANDARD DEDUCTION U/S 24(A), AT RS. 1,84,267/ - . THUS GROUND OF APPEAL NO. 1 ISDISMISSED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE BY LD. DR, WE FIND THAT LD. CIT(A) HAS CORRECTLY DISMISSED THIS GROUND OF APPEAL RAISED BY THE ASSESSEE. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THE REFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL 7 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI REASONED. RESULTANTLY, THIS GRO UND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 2 . 6 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN AFFIRMING THE DECISION OF ASSESSING OFFICER FOR ASSESSING INTEREST INCOME OF RS. 5,74,481/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 7. WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE ASSESSEE IN ITS DETAILED ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 14 TO 24 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 14. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT IN THE LIGHT OF FINDINGS OF THE AO. IN THE 8 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI ORIGINAL RETURN OF INCOME FILED ON 02.12.2013, THE APPELLANT HAS SHOWN THE TOTAL GROSS TURNOVER/RECEIPTS OF THE BUSINESS AT RS.30,00,000/ - ON WHICH I NCOME IS OFFERED U/S 44AD. ON BEING POINTED OUT BY THE DEPARTMENT, THROUGH NOTICE U/S 148 OF THE ACT THAT INTEREST INCOME OF RS. 5,84,293/ - AS SHOWN IN 26AS HAS ESCAPED ASSESSMENT, THE APPELLANT HAS REVISED THE GROSS TURNOVER OF BUSINESS AT RS.35,74,481/ - AND FILED ANOTHER RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 ON 29.04.2014. ACCORDING TO THE AO, SINCE INTEREST INCOME RECEIVED FROM THE TWO PARTIES ARE IN THE NATURE OF INCOME FROM OTHER SOURCES, IT CANNOT BE INCLUDED UNDER GROSS TURNOVER OF ELIGIBLE BUSINESS FOR THE PURPOSE OF INCLUSION U/S 44AD AND NEEDS TO BE SEPARATELY TAXES. ON THE OTHER HAND, IN THE WRITTEN SUBMISSION, IT IS ARGUED THAT INTEREST INCOME IS PART OF THE ELIGIBLE BUSINESS FOR THE PURPOSE OF COMPUTATION U/S 44AD. ALTERNATIVELY, SET OF INTEREST EXPENSES SHOULD BE GIVEN FROM THE INTEREST INCOME EARNED AS PER THE PROVISIONS OF SEC. 57(III) OF THE ACT. 15. AS FAR AS THE FIRST CLAIM OF THE APPELLANT THAT INTEREST INCOME IS PART OF THE 1IGIBLE BUSINESS FOR THE PURPOSE OF COMPUTATION U/S 44AD , IT IS OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT WERE AUDITED U/S 44AB FOR THE AN 200910 & 2010 - 11. IN FORM NO. 3CD OF THESE YEARS, THE NATURE OF BUSINESS MENTIONED 9 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI IN COLUMN NO. 8(A) IS 'PROPERTY DEVELOPER'. HENCE FOR THESE YEARS, THE APPELLAN T CANNOT BE TREATED AS IS NOT IN THE BUSINESS OF 'MONEY LENDING' COMMENCEMENT OF BUSINESS. THE INTEREST FROM THE UNUTILISED PORTION OF THE BORROWINGS FOR BUSINESS IS TAXABLE UNDER THE HEAD BUSINESS - CIT VS VARUN SHIPPING LTD (2011) 334 1TR 263 (BOM). B) T HE AR FURTHER STATES THAT JUST BECAUSE THE ASSESSEE WAS A BUILDER SINCE LAST MANY YEARS DOES NOT MEAN THAT HE CANNOT START AN ACTIVITY OF FINANCE. HE IS INTO THE SAID BUSINESS OF FINANCING SINCE 2009 AS ALL HIS PROJECTS CAME TO AN END. ALL THESE YEARS THER E WAS INTEREST INCOME AGAINST WHICH THERE WAS INTEREST EXPENSE. EXCEPT WHERE THE INVESTMENTS ARE INDEPENDENT OF BUSINESS MADE OUT OF SURPLUS FUNDS IN LONG TERM DEPOSITS IN THE FORM OF ADVANCING LOANS, THERE IS NO POSSIBILITY FS ASSESSING SUCH INCOME UNDER OTHER SOURCES'. SIMILAR VIEW HAS BEEN EXPRESSED IN CIT VS TIRUPATI WOOLEN MILLS LTD 193 ITR 252 (CAL), CIT VS AP INDUSTRIAL CORPORATION 175 ITR 361 (AP), CIT VS EAST INDIA HOTELS LTD. 207 ITR 881 (CAL) AND CIT VS PARAMOUNT PREMISES 190 ITR 259(BOM). C) THE AR OF THE ASSESSEE HAS REFERRED TO THE SECTION 'NATURE OF BUSINESS', IF MORE THAN ONE BUSINESS INDICATES THE THREE MAIN ACTIVITIES/ PRODUCTS ITR 4S. IN REVISED RETURN FILED, WE HAVE SHOWN AGAINST 10 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI NO.(2) CODE 0809 - FINANCIAL SERVICE SECTOR - OTHERS. SO THE AS SESSEE HAS :E1Y MENTIONED HIS NATURE OF BUSINESS AS FINANCIAL ACTIVITY. D) SINCE ASSESSEE IS INTO BUILDING AND FINANCE ACTIVITY, THERE ARE EVEN LOANS TAKEN WHICH ARE MENTIONED IN THE BALANCE SHEET. THESE LOANS ARE INTEREST BEARING BUT UNFORTUNATELY ITR 4S ASKS DETAILS IN E7 TO ELO WHICH DOES NOT INCLUDE LOANS TAKEN OR GIVEN. HAD IT BEEN THE CASE, THE FIGURES WOULD HAVE BEEN REFLECTED IN ITR. E) IF AT ALL INTEREST INCOME CANNOT BE INCLUDED IN THE BUSINESS INCOME, THEN CORRESPONDINGLY INTEREST EXPENSES SHOULD BE ALLOWED TO BE DEDUCTED FROM EARNING THE INTEREST INCOME. INTEREST EXPENSES CAN BE VERIFIED FROM THE P&L ACCOUNT OF THE AX 2011 - 12. JUST BECAUSE, HE WAS EARNING INTEREST INCOME IN THOSE YEARS DOES NOT MEAN THAT HE WAS IN SUCH FINANCIAL ACTIVITIES TOO. N OTHING HAS BEEN BROUGHT ON RECORD THAT DURING A.Y. 2011 - 12, THE APPELLANT HAS ENTERED INTO MONEY LENDING BUSINESS SO AS TO QUALIFY IT AS ELIGIBLE BUSINESS FOR THE PURPOSE OF SEC. 44AD IN THAT YEAR OR IN A SUBSEQUENT YEAR. 16. AS STATED IN THE PRECEDING PAR AGRAPHS, IN THE ORIGINAL RETURN OF INCOME FILED ON 02.12.2013, THE 11 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI APPELLANT DID NOT INCLUDE INTEREST INCOME OF RS. 5,84,293/ - UNDER GROSS TURNOVER/RECEIPTS OF THE BUSINESS FOR THE PURPOSE OF SEC. 44AD. IN FACT NO INTEREST INCOME WAS OFFERED TO TAX. IT WAS ONLY WHEN NOTICE U/S 148 FOR ESCAPEMENT OF INCOME WAS ISSUED BY THE AO, HE WAS COMPELLED TO INCLUDE THE INTEREST INCOME UNDER GROSS TURNOVER/RECEIPTS OF HIS BUSINESS FOR THE PURPOSE OF SEC. 44AD. IN MY OPINION, SUCH AN ACTION CAN ONLY BE TERMED AS AN AFTE R - THOUGHT. HAD INTEREST INCOME BEING PART OF BUSINESS OF THE APPELLANT, HE WOULD HAVE INCLUDED THE SAME AS ELIGIBLE BUSINESS IN THE RETURN OF INCOME. ASSUCH RELIANCE OF THE APPELLANT ON THE DECISION OF CIT VS VARUN SHIPPING LTD (2011) 334 ITR 263 (BORN) IS TOTALLY MISPLACED. MOREOVER, THERE IS NOTHING ON RECORD WHICH SUBSTANTIATE THE CLAIM OF THE APPELLANT THAT THE INVESTMENTS ARE INDEPENDENT OF BUSINESS MADE OUT OF SURPLUS FUNDS IN LONG TERM DEPOSITS IN THE FORM OF ADVANCING LOANS. IN MY OPINION, NOT MUCH COGNIZANCE CAN BE GIVEN TO THE NATURE OF ACTIVITY AS EXTENDING LOAN BEING ONE OF THE MAIN BUSINESS ACTIVITIES OF THE APPELLANT IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148 WHEN THE DEPARTMENT CAUGHT THE APPELLANT FOR CONCEALING THE INTEREST INCOME FROM TAXATION. HAD HE SHOWN SUCH ACTIVITIES IN THE ORIGINAL RETURN OF INCOME, 12 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI THE SITUATION WOULD HAVE BEEN DIFFERENT. HENCE, IT IS CONCLUDED THAT EARNING OF INTEREST INCOME BY THE APPELLANT CANNOT BE CONSIDERED AS ELIGIBLE BUSINESS FOR THE PURPOSE OF SEC. 44AD OF THE LT. ACT. 17. NOW COMING TO THE ANOTHER QUESTION AS WHETHER THE INTEREST DEBITED IN THE P & L A/C OF M/S CHANDRIKA ENTERPRISE CAN BE TREATED AS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING INTEREST INCOME OF RS. 5,84,293/ - IN F.Y. 2011 - 12. IN THIS REGARD, IN MY OPINION ONCE THE INTEREST INCOME EARNED ON LENDING LOANS AND ADVANCES PARTAKE THE CHARACTER OF INCOME FROM OTHER SOURCES, NO EXPENDITURE ON ACCOUNT OF INTEREST PAID IS ALLOWABLE UNLESS IT IS ESTABLISHED TH AT THE SAME IS DIRECTLY CORRELATED AND INCURRED EXCLUSIVELY FOR EARNING INTEREST INCOME, WHICH THE APPELLANT HAS FAILED MISERABLY EITHER DURING THE APPELLATE OR ASSESSMENT PROCEEDINGS. 18. SECTION 57(III) OF THE I. T. ACT READS AS UNDER: 'THE INCOME CHARGE ABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IS TO BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAMELY (I) XXXXX (IA) XXXX 13 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI (II) XXXXX (IIA) XXXX (III) ANY OTHER EXPENDITURE (NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOL LY ANY EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. IT IS THUS CLEAR THAT ONLY THOSE EXPENDITURE, WHICH ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING SUCH INCOME, ARE ADMISSIBLE DEDUCTION ON COMPUTATION OF INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 19. IN THIS REGARD, IT IS OBSERVED THAT HON'BLE SUPREME COURT IN THE CASE OF E,C V. DR. V.P. GOPINATHAN [2001] 248 ITR 449 (SC) HAS HELD THAT WHERE AN 'ASSESSEE HAD INVESTED MONEY IN A FIXED DEPOSIT IN A BANK ON INTEREST, AND HAD TAKEN A LOAN ON THE SECURITY OF THAT DEPOSIT FROM THE SAME BANK ON INTEREST, THE INTEREST PAID BY THE ASSESSEE ON THE LOAN WOULD NOT GO TO DIMINISH HIS INCOME FROM INTEREST ON THE FIXED DEPOSIT PAID BY THE BANK. SUCH DIMINUTION IS NOT COVERED BY A NY PROVISIONS IN THE LAW. IN THIS CONNECTION, HON'BLE ITAT, MUMBAI BENCH IN THE CASE OF LUPIN LTD., MUMBAL VS ACIT IN ITA NO. 4061/MUM/2011 DATED 17.02.2016 HAS HELD IN THE CONCLUDING PARAGRAPH THAT 14 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI 'HOWEVER, EVEN GRANTING DEDUCTIBILITY, THE PARAMETERS OF SECTION 57(11,) DO NOT ADMIT OF EXPENDITURE BEING INCURRED TO SUSTAIN A PREDETERMINED LOSS. 22. I ALSO FIND THAT THE ISSUE UNDER CONSIDERATION IS COVERED BY THE RECENT DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE OF MALANKARA PLANTATION LTD. VS ACIT ( 2016) 236 TAXMAM 61 (KERALA). THE HON'BLE HIGH COURT HAS CLEARLY HELD IN PARA 6 AS UNDER: 'THE INCOME IN QUESTION WAS RETURNED AS INCOME FROM OTHER SOURCES. WHEN AN INCOME HAS BEEN RETURNED AS INCOME FROM OTHER SOURCES, ONE OF THE HEAD OF INCOME PROVIDED I N SECTION 40, DEDUCTION CAN ALSO BE ONLY UNDER THE PRO VICIONS IN THE SAME HEAD OF INCOME. THEREFORE, IN RESPECT OF INCOME FROM OTHER SOURCES, DEDUCT/ON OF INCOME IS PERMISSIBLE ONLY UNDER SECTION 57, SUB SECTION (III) OF WHICH PROVIDES FOR DEDUCTION UNDER ANY OTHER EXPENDITURE (BEING IN THE NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHQLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. EVIDENTIALLY, THE PROVISION IS NOT ATTRACTED IN THE CASE IN QUESTION AND, THEREFORE, THE ASSES SING OFFICER HAS RIGHTLY DECLINED THE CLAIMS OF THE ASSESSEE.' 15 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI 23. APART FROM THAT IN THE FOLLOWING JUDGMENTS TOO, SAME PROPOSITION HAS BEEN UPHELD - I) MORAL TRADING & INVESTMENTS LTD. VS. DOT (ITAT, DEL) 127 LID 127 II) JASWANTRAI P MEHTA VS. CIT(GUJ.) 19 2 1TR 577 III) CRR VS AMRITABEN R SHAH (BORN) 238 1TR 777 IV) PADMAVATIJAIKRISHNA VS ADDL. CIT (SC) 166 1TR 176 24. IN THE LIGHT OF DISCUSSION MADE IN THE PRECEDING PARAGRAPHS AND RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENTS, I AM OF CONSIDERED OPINION THAT THE AO HAS CORRECTLY TREATED INTEREST INCOME OF RS. 5,84,293/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. HENCE THE ADDITION IS CONFIRMED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE BY LD. DR, WE FIND THAT LD. CIT(A) HAS CORRECTLY DISMISSED THIS GROUND OF APPEAL RAISED BY THE ASSESSEE. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US 16 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 3 . 8 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING ADDITION MADE BY ASSESSING OFFICER U/S 68 AMOUNTING TO RS. 6,00,000/ - ON ACCOUNT OF UNSECURED LOAN. 9 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERI AL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE ASSESSEE IN ITS DE TAILED ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS 17 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI CONTAINED IN PARA NO. 28 TO 29 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 28. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT BUT THE SAME IS REJECTED DUE TO FOLLOWING REASONS. 1. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS SUBMITTED THE LEDGER ACCOUNT (1ST APRIL 2001 TO 14TH MAY 2015) OF VIVA HOLDINGS WITH ONE SOLITARY ENTRY OF RECEIPT OF RS. 6 LAC DATED 1105.2017 AND A CONFIRMATION LETTER FOR THE PERIOD 1ST AP RIL 2015 TO 31ST MARCH, 2019. THE REASONS FOR NOT SUBMITTING THE DOCUMENTS ARE STATED TO BE THAT 'HE WAS UNABLE TO FURNISH THE REQUIRED DETAILS CALLED FOR' I FIND THAT THIS REASON IS NOT SUFFICIENT TO CONSTITUTE EXCEPTIONAL CIRCUMSTANCES AS SPECIFIED U/R 4 6A FOR ADMISSION OF ADDITIONAL EVIDENCES. HENCE, THESE DOCUMENTS ARE, POT ADMITTED AS - COGNIZABLE EVIDENCES IN THE APPELLATE PROCEEDINGS. THEREFORE, BEFORE THE AO AND THE UNDERSIGNED, THE APPELLANT HAS FAILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. 2. EVEN ON MERIT OF THE DOCUMENTS SUBMITTED, THE APPELLANT HAS JUST SUBMITTED THE CONFIRMATION LETTER FROM VIVA HOLDINGS FOR THE PERIOD 01ST 18 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI APRIL, 2015 TO 31ST MARCH, 2019. IT IS SURPRISING AS TO HOW A CONFIRMATION HAS BEEN GI VEN FOR A FUTURE PERIOD MAKING IT DEFECTIVE AND LACKING EVIDENTIARY VALUE. JUST QUOTING PAN, WHICH IS ALSO NOT LEGIBLE, IN ITSELF WILL NOT ESTABLISH IDENTITY OF THE CREDITOR. MOREOVER, THERE IS NOTHING ON RECORD TOESTABLISH CAPACITY OF THE CREDITOR PARTICU LARLY WHEN NO INTEREST HAS BEEN PAID FOR THE UNSECURED LOAN TAKEN. AS FAR AS THE GENUINENESS OF TRANSACTION IS CONCERNED, IT IS CLAIMED THAT THE LOAN WAS TAKEN ON 13.05.2011, BUT CONFIRMATION IS FILED FOR THE PERIOD 01.04.2015 & BEYOND AND NOT FOR THE A.Y. UNDER CONSIDERATION. NO BANK PASS BOOK OF THE APPELLANT OR VIVA HOLDING IS SUBMITTED TO ESTABLISH THE BONAFIDE OF THE LOAN TAKEN. 29. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED, IN MY CONSIDERED OPINION, THE APPELLANT HA S FAILED IN ESTABLISHING THE GENUINENESS OF THE TRANSACTIONS AND IDENTITY & CREDITWORTHINESS OF VIVA HOLDINGS. HENCE, THE ADDITION OF RS. 6,00,000/ - AS NON - GENUINE CASH CREDIT IS CONFIRMED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND 19 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI SUBMISSIONS MADE BY LD. DR, WE FIND THAT LD. CIT(A) HAS CORRECTLY DISMISSED THIS GROUND OF APPEAL RAISED BY THE ASSESSEE. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT ( A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 4 10. THIS GROUND IS GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 11 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST FEB 2018. SD/ - SD/ - (R.C. SHARMA ) ( SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21 . 02 .201 8 SR.PS . DHANANJAY 20 I.T.A. NO. 6762 /MUM/201 7 KANIHYALALMISTRI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI