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2021 (12) TMI 507 - AT - Income TaxProfessional income V/s Salary income - as per AO appellant did not provide details and nature of professional and technical services rendered to the company - whether the receipt from company is to be assessed as professional income or salary income - appellant failed to proof nexus between providing the loan taken on his name to the company - HELD THAT:- The assessee has not submitted the details of nature of professional and technical services rendered to the company. Even before the Tribunal, no efforts were made by the learned AR to substantiate the claim that the amount received by the assessee from the company are professional charges. A director may have duel capacity. He may be both director as well as employee. This principle is enumerated in the judgment of the Hon’ble Apex Court in the case of Ram Prashad v. CIT [1972 (4) TMI 1 - SUPREME COURT] When an assessee insists that he is rendering professional / technical services to a company, the burden is on him to prove the same. As mentioned earlier, the assessee has not furnished any evidence to prove that the services rendered by him to the company are of professional in nature. The treatment in the company’s books of account that the remuneration paid to the assessee are professional charges and deduction of tax at source is made u/s 194J of the Act is not the determinative factor to decide in the hands of the assessee whether the remuneration is salary income or income from business or profession. Therefore, we have no hesitation to hold that the receipt from company is nothing but salary income. Moreover, the interest expenditure cannot be deducted from the amount received from the company because there is no nexus between them. Only such expenditure which has been incurred wholly and exclusively to earn a particular income is allowable as a deduction from such income. In the instant case, there is no relation whatsoever between the interest expenditure from a mortgaged loan and the payment received for rendering certain services. Advancing interest free loans to the employer company cannot be a ground for claiming deduction of interest expenditure from the salary income received from it. In the instant case, it is not established that funds borrowed and diverted to SML are out of commercial expediency and for the purpose of assessee’s business. For the aforesaid reasoning, the common issue raised for assessment years 2013-2014 to 2015-2016, is dismissed. Disallowance u/s 14A - CIT(A) restricted the disallowance u/s 14A of the Act to the exempted income earned during the relevant assessment year - HELD THAT:- CIT(A) has relied on various judicial pronouncements in granting relief to the assessee. The assessee has not made out a case that the CIT(A)’s order is erroneous. Therefore, we confirm the CIT(A)’s order as correct and in accordance with law. It is ordered accordingly.
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