VIJAYARANGAM PILLAI LOHIT KUMAR,CHENNAI V. .ITO, NCC-3(1), CHENNAI

ITA 2482/CHNY/2024

AI Insights

The case involves an appeal by Shri Vijayarangam Pillai Lohit Kumar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed the disallowance of certain expenditures claimed under section 57(iii) of the Income Tax Act. The assessee had rented out properties and claimed various expenditures against the income from these properties. However, part of the expenditure was paid through the bank account of a Hindu Undivided Family (HUF), which the assessee claimed was a loan adjustment. The AO disallowed this expenditure due to insufficient documentary evidence, a decision upheld by the CIT(A). The assessee appealed to the Income Tax Appellate Tribunal, arguing that the expenditures were wholly and exclusively incurred for earning the income and thus should be allowable under section 57(iii).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472425 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 23-09-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T.M. SUGANTHAMALA LD.
• Assessee Lawyers: R. VIJAYARAGHAVAN LD
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अिधकरण ‘बी’ \u0010ा यपीठ चे\u0015ई म\u0018। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI मा ननीय +ी मनोज क ुमा र अ/वा ल ,लेखा सद4 एवं मा ननीय +ी मनु क ुमा र िग8र, \u0010ा ियक सद4 क े सम9। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं ./ ITA No.2482/Chny/2024 (िनधा :रणवष: / Assessment Year: 2018-19) Shri Vijayarangam Pillai Lohit Kumar No.1, Muthiah Mudali Street Gopalapuram, Chennai – 600 086 बना म/ Vs. ITO Non Corporate Circle 3(1) Chennai \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No. AACPL-3510-G (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001c कीओरसे/ Appellant by : Shri R. Vijayaraghavan (Advocate) - Ld.AR \u001f थ\u001cकीओरसे/Respondent by : Ms. T.M. Suganthamala (Addl.CIT) - Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 11-12-2024 घोषणा की तारीख /Date of Pronouncement : 11-12-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-07-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 01-02-2021. The sole grievance of the assessee is disallowance of expenditure u/s 57(iii). Having heard rival submissions, the appeal is disposed-off as under. 2 2. The assessee rented out certain properties for commercial purposes. The assessee offered building maintenance, GST, Service Tax, interest etc. for Rs.45.27 Lacs as ‘Income from other sources’. At the same time the assessee claimed expenditure of GST, Service tax, building maintenance, Genset expenses, Lift Maintenance and Electricity Charges aggregating to Rs.51.55 Lacs against the same. Out of expenditure of Rs.19.54 Lacs as claimed on account of building maintenance, Genset expenses, Lift Maintenance and Electricity charges, the amount of Rs.8.32 Lacs was paid from assessee’s own bank account whereas the remaining expenditure of Rs.11.21 Lacs was paid through bank account of HUF as detailed in the assessment order. The assessee submitted that the payments effected through HUF account were deemed as loan from HUF. However, in the absence of sufficient documentary evidences as forthcoming from the assessee, the aforesaid submissions were rejected and the expenditure of Rs.11.21 Lacs was disallowed. The Ld. CIT(A) noted that the assessee failed to establish the nexus between the income earned and expenditure incurred. The conditions specified u/s 57 for allowing expenses incurred wholly and exclusively for earning the income had not been fulfilled by the assessee. The assessee failed to substantiate the same even during appellate proceedings. Accordingly, the stand of Ld. AO was confirmed. Aggrieved, the assessee is in further appeal before us. 3. The Ld. AR submitted that the corresponding rental income has been offered to tax as ‘Income from other sources’ and the expenditure so incurred by the assessee fulfill the conditions of Sec. 57(iii). The Ld. AR also stated that there were loan transactions between the assessee and HUF entity and the payment made through the bank account of HUF 3 was adjusted in the loan account ledger. The Ld. AR submitted that the assessee is in a position to substantiate the same, if another opportunity is granted. 4. We are of the opinion that the issue is factual one. As per conditions of Sec. 57(iii), any expenditure incurred wholly and exclusively for earning of the income which is offered under the head ‘income from other sources’ would be allowable to the assessee. The assessee must prove this nexus. Secondly, it has to be established that the expenditure was incurred by the assessee only and not by other entity and no deduction thereof was claimed by the other entity. For the said purpose of examination and verification, the issue of deduction u/s 57(iii) stand restored back to the file of Ld. AO for de novo assessment with a direction to the assessee to substantiate the same. 5. The appeal stand allowed for statistical purposes. Order pronounced on 11th December, 2024. Sd/- (MANU KUMAR GIRI) \u0010ा ियक सद4 / JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद4 / ACCOUNTANT MEMBER चे2ई Chennai; िदनांक Dated : 11-12-2024 DS आदेशकीTितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु;/CIT Chennai 4. िवभागीय\u001fितिनिध/DR 5. गाड@फाईल/GF "