PRAKASH CHIMANLAL SHETH,MUMBAI V. INCOME TAX OFFICER 19(2)(5), MUMBAI

ITA 956/MUM/2024

AI Insights

The case involves Prakash Chimanlal Sheth, who appealed against the order of the Addl. / JCIT (A)-6, Kolkata, which disallowed expenses amounting to Rs.4,73,573 claimed under section 57(iii) of the Income Tax Act. These expenses were claimed against an interest income of Rs. 51,30,947, with the assessee reporting a profit of Rs.4,79,790. The Assessing Officer initially disallowed the expenses due to lack of evidence and claimed nexus to the interest income. The Tribunal found that the assessee had provided sufficient documentation to support the expenses and directed a re-examination of the claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474827 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH PAMNANI
• Assessee Lawyers: MADHAO VICHORE VIRTUALLY
• Section: 22; 20

Judgement Text

" DIN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SMT RENU JAUHRI, ACCOUNTANT MEMBER ITA No.956/Mum/2024 (Assessment Year :2017-18) Prakash Chimanlal Sheth B-Basement Jewel Building Mama Parmanand Marg Opera House Maharashtra- 400 007 Vs. Income Tax Officer 19(2)(5) Mumbai PAN/GIR No.AABPS9043E (Appellant) .. (Respondent) Assessee by Shri Madhao Vichore(Virtually) Revenue by Shri Mahesh Pamnani Date of Hearing 13/01/2025 Date of Pronouncement 30/01/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 15/01/2024 passed by Addl. / JCIT (A)-6, Kolkata. 2. In various grounds of appeal, the assessee has challenged disallowance of expenses of Rs.4,73,573/- claimed u/s.57(iii). 3. The brief facts are that assessee had shown receipt of interest income of Rs. 51,30,947/-. Against this interest income, assessee has claimed expenses to the tune of Rs.44,63,407/- and ITA No.956/Mum/2024 Prakash Chimanlal Sheth 2 claimed profit of Rs.4,79,790/-. In the computation of income assessee has claimed following expenses:- Misc. Expenses 49,970/- Stipend 37,500/- Salary 1,00,000/- Court Fees 1,59,000/- Electricity Charges 35,921/- Jewel Soc. Maintenance 38,012/- Legal Fees 5000/- Office Expenses 10,700/- Professional Fees 1,500/- Telephone Expense 13,782/- Vehicle Expense 13,420/- Vehicle Insurance 8,772/- TOTAL 4,73,577/- 4. The ld. Assessing Officer had disallowed these expenses stating that assessee has not filed any evidence regarding above payments and there is no nexus of the expenditure for earning interest income and he held that certain expenses are falling in nature of personal expenses. Even the ld. CIT (A) has confirmed the said disallowance. 5. Before us it has been stated that in all the past years the assessee claimed the interest income and the similar expenditure claimed has been allowed u/s.143(3). It has been stated that assessee has filed all the relevant bills and evidences and before us also following documents have been filed:- ITA No.956/Mum/2024 Prakash Chimanlal Sheth 3 Sr. No. Description 1 Misc. Expenses (Rs.49970/-) Ledger Copy and 12 Vouchers in support of these expenses. 2 Stipend (Rs.37,500,/-) and Salary (Rs.1,00,000/-) Ledger Copy and 20 Vouchers in support of these expenses. 3 Court Fees (Rs.1,59,000) and Legal Fees (Rs.5000) Ledger Copy and 3 Court Fee Challans in support of these expenses. 4 Electricity Charges (Rs.35,921/-) Ledger Copy and 16 Bills in support of these expenses. 5 Jewel Society Maintenance (Rs.38,012/-) Ledger Copy and 4 Bills in support of these expenses. 6 Office Expenses (Rs.10,700/-) Ledger Copy and 1 Bill in support of this expense. 7. Professional Fees (Rs.1500/-) Ledger Copy in support of this expense. 8. Telephone Expenses (Rs.13,782/-) Ledger Copy and 22 Bills in support of these expenses. 9 Vehicle Expenses (Rs.13,420/-) Ledger Copy and 30 Bills in support of these expenses. 10 Vehicle Insurance (Rs.8,772/-) Ledger Copy and 2 Bills in support of these expenses 6. It has been stated that all these expenses pertain to lending of money only from which assessee has been earning interest. 7. Here the disallowance has been made on the ground that these are personal expenditure and it is not verifiable. However we find that assessee has given all the details which have not ITA No.956/Mum/2024 Prakash Chimanlal Sheth 4 been verified. Therefore, in the interest of justice, matter is restored back to the file of AO and ld. Assessing Officer is directed to verify these documents and if in the past similar expenses have been allowed, then no disallowance should be made. It is not the case of the ld. Assessing Officer that the nature of expenses debited cannot be allowed u/s.57(iii), albeit, assessee has not produced any evidence regarding the payment and has not shown the nexus of expenses spent for earning the interest income. Most of these expenses are not personal in nature, for example, expenditure like Court fees, electricity charges, society maintenance charges, office expenses, professional fees, salary etc., does not appear to be personal in nature. After verifying the same, ld. Assessing Officer will examine these details and decide in accordance with law. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 30th January,2025. Sd/- (RENU JAUHRI) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 30/01/2025 KARUNA, sr.ps ITA No.956/Mum/2024 Prakash Chimanlal Sheth 5 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "