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2022 (7) TMI 115 - AT - Income TaxRectification u/s 154 - Disallowance of interest on account of the fact that the money was invested in the capital of the firms, to earn exempt income - as noted that the appellant was neither deriving any interest income nor remuneration from these partnership firms and the interest expenditure was thus disallowed - HELD THAT:- The assessee in the instant case is a partner in the firm M/s. Vivilash Digital Colour Labs Pvt.Ltd and has invested in the firm by borrowing from financial institutions i.e Chola-IDBI on which she has paid interest of Rs. 15,85,752/-. There is also a provision in the partnership deed to pay interest on capital to the partners. Since, there was no sufficient profit, interest was not provided by the firm on the capital. The assessee claimed interest income as expenditure and set-off the same against other income. This was also accepted by the AO in the order passed u/s. 143(3). It has been held in various decisions, which are relied on by the ld.counsel for the assessee that there need not be income to claim the expenditure u/s. 57. It is also held that such interest expenditure is allowable, even when there is no income. Thus, the issue as to whether the assessee has correctly claimed the set-off such interest paid to Chola-IDBI, in absence of any interest income for the firm is a highly debatable issue. It has been held in various decisions that provisions u/s. 154 for rectification of the order cannot be applied to debatable issues. The Hon’ble Supreme Court in the case of T.S.Balaram vs Volkart Brothers [1971 (8) TMI 3 - SUPREME COURT] has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points which there may be conceivably two opinions. It was held that a decision on a debatable point is not a mistake apparent from the record. Therefore set aside the order of the ld.CIT(A) on this issue and the grounds raised by the assessee are allowed.
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