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2016 (5) TMI 242 - AT - Income TaxDisallowance of business expenses - Held that:- As objection raised by the ld. Assessing Officer in disallowing these expenses has already been struck down by the decision of co-ordinate bench in assessee's own case confirming the existence of business activity in the year under appeal, we do not find any reason for disallowance of these normal business expenses and accordingly we allow the expenses of ₹ 23,82,268/- as business expenses out of the total disallowance of ₹ 54,29,508/- as mentioned in ground no.1 of the appeal. - Decided against revenue Disallowance of bad debt - Held that:- When assessee’s case has travelled to the Tribunal in the second round and assessee had sufficient opportunity to prove the genuineness of the claim of bad debt of ₹ 30,47,240/- and then also he has been unable to satisfy the lower authorities and even before us, during the course of hearing, we do not find any reason to accept the contentions and claim made by the assessee in this ground relating to disallowance of bad debt in the given circumstances - Decided against assessee Allowability of interest expenses under the provisions of section 57(iii)- Disallowance of interest claimed by assessee against interest income shown under the head income from other sources - Held that:- In order to claim expenses under the provisions of section 57(iii) of the Act nexus has to be proved that the same has been incurred for earning the income shown under the provisions of section 56 of the Act i.e. the income from other sources. Applying these provisions to the facts of the case, we find that assessee has declared interest income of only ₹ 534557/- and has claimed interest expenses of ₹ 4554551/- Out of total interest claimed at ₹ 4554551/- Assessing Officer has already allowed the claim at ₹ 2199959/- and for the balance amount of interest of ₹ 2354592/- nothing was placed on record by the assessee to prove that it has been spent to earn interest income which has been declared u/s 56 of the Act and rather we find force in the observation made by ld. Assessing Officer that the amount of interest of ₹ 2354592/- has been paid on loans taken has actually been diverted towards investment in shares and other non-interest bearing investment and this gets further support by the fact that assessee has earned long term capital gains of ₹ 13260055/-. In these circumstances, we are unable to accept the contention made by ld. AR of assessee about the allowability of interest expenses at ₹ 2354592/- under the head income from other sources and we uphold the order of ld. CIT(A) and accordingly dismiss this ground of assessee.- Decided against assessee Insurance claim received and sundry balance written off treated as ncome from other sources - Held that:- In the light of decision of the co-ordinate bench in assessee’s own case wherein it has been held that assessee has carried out the business activities and allowed the impugned profit and loss account wherein the insurance claim and sundry balance written off were shown in the credit of profit and loss account of M/s Labh Enterprise and these credits of ₹ 30,443/- and at ₹ 14,054/- on account of insurance claim and sundry balance are arising out of business activities of M/s Labh Enterprise carried out before 1.4.1995 i.e. taking over of the business by the assessee as a sole proprietor. We are, therefore, of the view that these credits of ₹ 30,443/- and ₹ 14,054/- on account of insurance claim received and balance written off totaled at ₹ 44997/- were rightly shown by the assessee under the head business income and ld. CIT(A) was not correct in upholding the action of Assessing Officer in assessing these credits of ₹ 44997/- under the head income from other sources - Decided in favour of assessee
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