VIJAY DATA, Alwar V. ITO, Alwar

ITA 939/JPR/2013

• Counselvise Citation: 93923114 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT LD DR DHK
• Keywords: Business income; Salary income; Capital expenditure
• Section: 80C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 939/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 200-10 SHRI VIJAY DATA BHAGWATI SADAN SWAMI DAYANAND MARG, ALWAR CUKE VS. THE ITO WARD- 2 (2) ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAQPD 7662 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL , CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT LD. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 30 /11/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS ASSESSEES APPEAL ARISING OUT OF THE ORDER OF LD. CIT(A) ALWAR; DATED 10-09-2013 FOR AY 2009-10. SOLE GROUND RAISED IS AS UNDER:- THAT THE AO HAS ERRED IN LAW AS WELL AS ON THE FA CTS AND CIRCUMSTANCES OF THE CASE IN INVOKING THE PROVISION OF SECTION 57(III) OF THE I.T. ACT FOR TH E PURPOSE OF SET OFF OF LOSS OF RS. 4,12,252/- UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST INCOME FROM OTHER HEADS OF INCOME WHEREAS SUCH LOSS IS ITA NO. 939/JP/2013 SHRI VIJAY DATA VS. ITO WARD- 2(2), ALWAR . 2 ALLOWABLE TO BE SET OFF AGAINST THE INCOME FROM OTH ER HEADS OF INCOME IN VIEW OF PROVISION OF SECTION 71( 2) OF THE ACT, THUS THE ACTION OF THE AO IS AGAINST TH E PROVISION OF THE ACT AND THE CIT (A) HAS ERRED IN SUSTAINING THE SAME. 2.1 BRIEF FACTS ARE LD. AO DISALLOWED THE ASSESSEE S CLAIM IN THIS BEHALF BY FOLLOWING OBSERVATIONS:- THE ASSESSEE HAS SHOWN GROSS TOTAL INCOME AT RS. 9,29,166/- AND THEREAFTER CLAIMED DEDUCTION OF RS. 1,00,000/- U/S 80C OF THE ACT . I HAVE PERUSED THE PROVISION OF SE CTION 71 OF THE ACT WHEREIN LOSS RAISED UNDER THE HEAD OTHER SOURCE CANNOT BE SET OFF OUT OF SALARY, HOUSE PROPERTY AND BUSINESS OR P ROFESSION INCOME. AS SUCH PROVISION OF SECTION 57(III) ARE AL LOWED TO ASSESSEE TO GET DEDUCTION UPTO EXTEND OF INCOME DEC LARED UNDER THIS HEAD. THE MAIN CONTENTS OF THE PROVISIONS OF S ECTION 57(III) ARE REPRODUCED AS UNDER:- THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES SHALL BE COMPUTED AFTER MAKING THE FOLLOWI NG DEDUCTIONS, NAMELY:- ANY OTHER EXPENDITURE (NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SU CH INCOME. THE ASSESSEE WAS ASKED TO FILE JUSTIFICATION FOR PA ID EXCESS INTEREST PAID AND DEDUCTION CLAIMED OUT OF S ALARY, HOUSE PROPERTY AND BUSINESS INCOME. THE LD. AR OF A SSESSEE FILED COPY OF ACCOUNT OF M/S. PYARE LAL NIRANJAN LA L & COMPANY, ALWAR ON 14.12.2011 TO WHOM THE ASSESSEE H AS PAID INTEREST. I HAVE CAREFULLY CONSIDERED ALL THE FACTS OF CASE T HAT THE ASSESSEE HAS PAID INTEREST OF RS.7,60,260/- TO M/S. PYARELAL NIRANJAN LAL & CO. ALWAR FOR MONEY BORROWED TO HIM DURING THE ITA NO. 939/JP/2013 SHRI VIJAY DATA VS. ITO WARD- 2(2), ALWAR . 3 PREVIOUS YEARS. THE ASSESSEE IS HAVING NO RELEVANCE TO PAY SUCH INTEREST FOR EARNING SALARY INCOME, HOUSE PROPERTY INCOME AND BUSINESS OR PROFESSION INCOME DURING THE YEAR UNDER CONSIDERATION. THUS DEDUCTION OF INTEREST CAN BE ALLOWED TO THE EX TENT OF OTHER INCOME EARNED UNDER THE HEAD OTHER SOURCE. THEREFOR E, I ALLOW INTEREST DEDUCTION TO THE EXTENT OF RS.3,48,008/- A ND INTEREST LOSS OF (-) RS.4,12,252/- CLAIMED OUT OF SALARY, HOUSE PROP ERTY AND BUSINESS INCOME IS DISALLOWED UNDER THE PROVISION O F SECTION 57 (III) OF THE ACT ACCORDINGLY. 2..2 AGGRIEVED ASSESSEE PREFERRED 1 ST APPEAL, LD. CIT(A) CONFIRMED THE AOS ORDER BY FOLLOWING OBSERVATIONS:- 4.5 I HAVE GONE THROUGH THE PROVISIONS OF SECTION 5 7 OF THE IT ACT WHICH RELATE TO DEDUCTION AGAINST THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE PROVI SIONS OF CLAUSE (III) OF SECTION 57 ARE APPLICABLE TO THE FA CTS OF THE PRESENT CASE AND ARE REPRODUCED AS UNDER:- ANY OTHER EXPENDITURE (NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SU CH INCOME. 4.6 HOWEVER, BEFORE GOING INTO THE DETAIL, IT WOULD BE NECESSARY TO CONSIDER THE BASIC FACTS OF THE CASE, WHICH ARE UNDISPUTED. (I) THE APPELLANT HAS MADE A CLAIM FOR PAYMENT OF INTEREST OF RS.7,60,260/-. (II) THIS INTEREST HAS B EEN PAID TO THE FIRM M/S PYARE LAL NIRANJAN LAL & CO., ALWAR FOR MONEY B ORROWED BY HIM. NOW, WHAT IS A MATERIAL FACT BEFORE CONSIDERIN G THE CLAIM OF DEDUCTION IS, THE PURPOSE FOR WHICH THE MONEY HAS B EEN BORROWED BY THE APPELLANT. THE APPELLANT HAS NOT MADE ANY SU BMISSION EITHER IN THE COURSE OF PRESENT PROCEEDINGS OR BEFORE THE AO ON THE ISSUE OF PURPOSE FOR WHICH THE MONEY/FUNDS BORROWED HAVE BEEN USED. SINCE THE MONEY BORROWED HAS NOT BEEN CLAIMED TO HA VE BEEN USED FOR INVESTMENT IN THE HOUSE PROPERTY (THE INCOME OF WHICH IS SUBJECT TO TAXATION), HENCE THE CLAIM OF INTEREST PAID BY T HE APPELLANT CAN ONLY BE SUSTAINED AGAINST THE INTEREST INCOME, WHIC H IS RECEIVED BY ITA NO. 939/JP/2013 SHRI VIJAY DATA VS. ITO WARD- 2(2), ALWAR . 4 THE APPELLANT (IS SUBJECT TO TAXATION UNDER THE HEA D INCOME FROM OTHER SOURCES). IN THE ABSENCE OF ANY EVIDENCE, THE CLAIM OF INTEREST PAID BY THE ASSESSEE CAN NOT BEEN MADE EITHER AGAIN ST THE INCOME FROM SALARY OR INCOME FROM HOUSE PROPERTY. SIMILARL Y, THE CLAIM CANNOT BE MADE AGAINST THE INCOME EARNED ON ACCOUNT OF REMUNERATION RECEIVED FROM THE FIRM, TO WHICH THE I NTEREST HAS BEEN PAID. THUS, WHAT IS LEFT WITH THE APPELLANT TO MAKE A CLAIM IS ONLY THE INCOME EARNED AND SHOWN UNDER THE HEAD INCOME F ROM OTHER SOURCES. 4.7 THE CLAIM MADE BY THE APPELLANT THAT PROVISIONS OF SECTION 71 OF THE IT ACT ARE APPLICABLE IN THIS CAS E IS NOT CORRECT AS THE PROVISIONS OF CHAPTER-VI, RELATING TO SET OFF O R CARRY FORWARD WOULD COME INTO THE PICTURE ONLY AFTER THE TOTAL IN COME UNDER CHAPTER-IV HAS BEEN COMPUTED. THE CASE LAWS RELIED UPON BY THE APPELLANT ARE THUS NOT APPLICABLE TO THE FACTS OF T HIS CASE. FURTHER, THE ARGUMENT TAKEN BY THE APPELLANT THAT THE INTERE ST PAID TO THE FIRM HAS SUFFERED TAXATION AT THE RATE OF 30% WOULD BE OF NO HELP. HOWEVER, IT IS SEEN FROM THE COMPUTATION OF TOTAL I NCOME OF THE FIRM M/S. PYARE LAL NIRANJAN LAL & CO., ALWAR THAT THE FIRM IS ENGAGED IN THE BUSINESS OF TRADING OF FOOD GRAINS. HOWEVER, THE GROSS PROFIT SHOWN IN THE P&L ACCOUNT IS ONLY RS.51 ,453/- AND INTEREST INCOME OF RS.37,85,093/- HAS BEEN DECLARED AND ALSO CLAIM OF INTEREST PAYMENT OF RS.26,67,674/- HAS BEEN MADE . BESIDES OTHER EXPENSES CLAIMED BY THE FIRM, A NET PROFIT OF RS.14 1911/- HAS BEEN SHOWN AND ON WHICH TOTAL TAX OF RS.42573/- HAS BEEN PAID. THESE FACTS HAVE BEEN DETAILED TO MAKE A REFLECTION ON TH E HOLLOWNESS OF THE CLAIM MADE BY THE APPELLANT. IN VIEW OF THIS DI SCUSSION, THE PROVISIONS OF SECTION 57 (III) OF THE IT ACT COME I NTO PLAY AND ACCORDINGLY THE AO HAS RESTRICTED THE CLAIM OF INTE REST PAID BY THE APPELLANT TO THE EXTENT OF INCOME EARNED UNDER THE HEAD INCOME FROM OTHER SOURCES. 4.8 CONSIDERING THESE FACTS, I UPHOLD THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF LOSS OF RS.4,12,252/- M ADE BY THE APPELLANT UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.3 AGGRIEVE ASSESSEE IS IN 2 ND APPEAL BEFORE ITAT. LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTIONS AND CASE LAWS C ANVASSED BEFORE THE ITA NO. 939/JP/2013 SHRI VIJAY DATA VS. ITO WARD- 2(2), ALWAR . 5 AUTHORITIES BELOW. IT IS CONTENDED THAT AS SEC. 71( 2) OF THE I T ACT INTRA HEAD LOSSES OF SAME ASSESSMENT YEAR ARE TO BE SET O FF AGAINST EACH OTHER INCLUDING THE LOSS U/S 57. THE ASSESSEES CLAIM IS WITHIN THE PARAMETER OF SEC. 71(2) WHICH HAS BEEN UNJUSTIFIABLY DENIED BY A UTHORITIES BELOW. 2.4 LD. DR ON THE OTHER HAND CONTENDS THAT AO AND L D. CIT(A) HAVE CONSIDERED TWO ASPECTS OF THE MATTER. EXPENDITURE A LLOWABLE U/S 57(III) IS SPECIFIED AS ANY OTHER EXPENDITURE LAID OUT OR EXPE NDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SU CH INCOME. ON THIS PARAMETER THE EXPENDITURE CLAIMED BY THE ASSESSEE I S NOT EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING T HE INTEREST INCOME SHOWN BY THE ASSESSEE UNDER INCOME FROM OTHER SOU RCES. THUS APPLYING THIS MANDATORY AND STATUTORY PROVISION THE EXPENDITURE CLAIM BY THE ASSESSEE IS NOT ALLOWABLE. THIS HAS BEEN EXPEDI TIOUSLY REFERRED TO AS LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES FO R LIMITED PURPOSE. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS AND MATERIAL ON RECORD IT CLEARLY EMERGES THAT THE EXPENDITURE CLAIMED BY THE ASSESSE E QUA THE INTEREST INCOME AS OTHER SOURCES IS NOT SPENT WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF EARNING THE INTEREST INCOME. CONSEQUENT LY BY SIMPLE OPERATION OF PROVISIONS OF SEC. 57(III) THE EXCESS EXPENDITURE CLAIMED BY ITA NO. 939/JP/2013 SHRI VIJAY DATA VS. ITO WARD- 2(2), ALWAR . 6 ASSESSEE IS FUNDAMENTALLY NOT ALLOWABLE. CONSEQUENT LY THE QUESTION OF ANY LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES DOES NOT ARISE. AS A RESULT THE ISSUE OF TREATING IT AS AND ALLOWING SET OFF OF ALLEGED LOSS HAS NO EXISTENCE IN STRICT TERMS OF LAW IN THE GIVEN FACTS AND CIRCUMSTANCES. THEREFORE, THE ASSESSEES CLAIM IS UNTENABLE AND CA NNOT BE ACCEPTED. 3.0 IN THE RESULT ASSESSEES APPEAL IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 /11/20 15 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 /11/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIJAY DATA,ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO , WARD- 2(2), ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 939/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR