Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Sushil Kumar Beniprasad Goenka Versus Income Tax Officer

Disallowance of interest expenses - whether interest expense was incurred to earn interest income on capital balance in the firm which is taxable as business income? - "Income from other sources" OR "Business Loss" - Held that:- No doubt, the interest due to or received by partner on capital contributed by partners in partnership firm is assessed to tax as business income u/s 28(v) of the Act in the hands of the partner but the assessee could not show that the partners have in-fact agreed to pay .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n from the actual conduct of Systematic Exports over the years to prove that the firm Systematic Exports in fact paid interest on capital contributed by the partners when there were profits in the said firm . The share of profits on the capital contributed by the assessee with the partnership firm M/s Systematic Exports , are exempt from tax u/s. 10(2A) of the Act. Thus, necessarily the expenses incurred in relation to earning of the income which does not form part of total income, has to be dis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ramit Kochar, Accountant Member Assessee by : Shri Rishabh Chaturvedi Revenue by : Ms. Pooja Swaroop ( D.R. ) ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee, being ITA No. 1430/Mum/2014, is directed against the appellate order dated 7th October, 2013 passed by learned Commissioner of Income Tax (Appeals)- 25, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2010-11, the appellate proceedings before the learned CIT(A) arising from the assessment orde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f ₹ 10,27,507/-. The Appellant respectfully submits that CIT(A) ought to have considered that interest expense was incurred to earn interest income on capital balance in the firm which is taxable as business income and ought to have ignored Appellant's mistake of claiming interest expense as loss under the head "Income from other sources" instead of "Business Loss" as there is no estoppel against law, particularly when the total income, as returned, remains the same .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

,27,507/- on account of interest payment against the salary income and interest income. It may be noted that the only allowable deduction out of salary income are professional tax and entertainment allowances. The deduction of interest payment claimed by the assessee out of the salary income is not allowable under the Income tax Act and interest payment claimed against the interest income are allowable only if the said expenses are incurred for the purpose of making or earning such income as per .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd have paid interest of ₹ 10,27,507/- during the year ended 31.3.2010. 2. Above borrowed funds have been utilized by me in investing in Systematic Exports, a firm in which I am a partner. 3. The purpose of giving above loan was to earn interest. However, unfortunately, due to losses, Systematic Exports has been unable to pay any interest. 4. If Systematic Exports had earned profits and was in a position to pay interest to me, I would have shown the same as my Business Income as per 28(v) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ave been liable to tax as business income (investment as capital in partnership firm to earn interest u/s 28(iv)), I have incurred the loss of ₹ 10,27,507/- under the head "profits and gains of business or profession. 7. My income from other sources stand corrected to ₹ 1,08,297/- instead of' loss of ₹ 9,19,210/-. 8. After setting off of business loss against income from other heads, viz; salary income, income from capital gain and income from other sources, my total i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ence, the contention of the assessee that had there been profit in the partnership firm, the assessee would have received interest was not acceptable/teneble. The disallowance u/s 14A of the Act was not worked out by the assessee as observed by the AO. The assessee had made investment in the capital of partnership firm out of loan received from LIC and the assessee has not paid the interest on loan taken for the purposes of earning interest as no interest was received from partnership firm. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

submitted that he had borrowed funds from LIC and paid interest of ₹ 10,27,507/- during the year and this money had been utilized for investing in the capital of Systematic Exports in which the assessee is a partner. The assessee credited this borrowed fund in his capital account in the books of the firm and interest is allowable to partners in terms of partnership deed of the firm. The assessee submitted copy of bank book, bank statements, capital account, partnership deed, balance sheet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

balance sheet of the firm M/s Systematic Exports that the assessee had opening outstanding capital at ₹ 4,82,079/-, additions made during the year at ₹ 67,786/-, withdrawals during the year at ₹ 5,33,834/-, share of loss at ₹ 5,29,619/-, and closing balance in negative at ₹ 5,13,588/-. The assessee was entitled to 15% share in the capital of firm and his capital at the end of year was negative, as against total capital of the firm at ₹ 346.05 lakhs. The ld. CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in capital of the firm with the sole intention of earning interest from the firm. The learned CIT(A) observed that the assessee failed to show any nexus with the loans taken and payments made to the firm except a stray incident instance which is not sufficient to justify the interest payment of an amount as high as ₹ 10,27,507/- on such loans taken. There is no evidence to prove that the assessee s sole intention was to earn interest on capital employed in the firm as against share in prof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

order dated 07-10-20113 passed by learned CIT(A). 6. Aggrieved by the appellate order dated 07-10-2013 passed by the ld. CIT(A), the assessee filed appeal before the Tribunal. 7. The ld. Counsel for the assessee submitted that the assessee has availed LIC loan and interest is paid on the said loan. The assessee has invested the said loan in partnership firm Systematic Exports in which the assessee is partner and the assessee would have earned interest had there been profits , by relying on clau .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of the learned CIT(A). 9. In the rejoinder, the ld. Counsel submitted that interest income on capital of partnership firm is taxable u/s 28(v) of the Act and hence interest should be allowed as deduction / set off against income from other sources and salary. It was submitted that had there been profits, the partnership firm Systematic Exports in which the assessee was partner would have given interest on the investment in the capital by the assessee. 10. We have heard the rival contentions an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me of ₹ 9,19,210/-. Before proceeding further, we would like to state that losses under the head Profit and gain from business or profession are not allowed to be set off against salary income in view of provisions of Section 71(2A) of the Act which was inserted by Finance Act, 2004, w.e.f. 01-04-2005. The assessee has stated to have invested LIC Loan in the capital of the partnership firm M/s Systematic Exports but on careful perusal of the ledger extracts submitted by the assessee in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

de paper book/page 4 that the assessee has made payment of ₹ 25,00,000/- on 10-10-2008 to City Apparels vide cheque no. 153747 , ₹ 43,00,000/- to City Apparels vide cheque no. 153748 dated 14-10-2008, ₹ 15,00,000/- to Sushil Goenka HUF vide cheque 153751 on 15-10-2008, ₹ 20,00,000/- to City Apparels vide cheque no. 153752 on 17-10-2008 and also payment of ₹ 10,00,000/- to Systematic Exports vide cheque no. 153753 dated 17-10-2008. Thus, the assessee has invested onl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee in books of Systematic Exports also confirms the same. The balance outstanding in the capital account of the assessee with Systematic Exports is negative as brought out in the learned CIT(A) orders from the balance sheet of the firm M/s Systematic Exports that the assessee had opening outstanding capital at ₹ 4,82,079/-, additions made during the year at ₹ 67,786/-, withdrawals during the year at ₹ 5,33,834/-, share of loss at ₹ 5,29,619/-, and closing balance in negat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l contributed by partners rather there is a general clause in partnership deed vide clause 8 which reads as under : "The capital of the partnership shall be brought in by the partners as and when required for the business in the manner as mutually agreed upon between the parties referred hereto, and the partners may be paid interest, at a rate, on their Capital as may be mutually agreed upon from time to time." There is a general clause in the partnership deed vide clause 8 of partners .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ematic Exports during the impugned assessment year and a valid and legal binding obligation is cast on the partnership firm M/s Systematic Exports to pay interest on capital specifically to the partners in presenti during the impugned assessment year . The assessee s had taken a contention that had there been any profits in Systematic Export, the assessee would have received interest from the partnership firm need verification from the actual conduct of Systematic Exports over the years to prove .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: GST return filing software online | Easy GST compliance management

Forum: Input credit of gst paid on urd

Forum: 3B mistake

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Input tax credit

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

Forum: GST on Notional rent

Forum: GST ON SALES PROMOTION

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish

Article: WHEN CAN ONE TAKE ITC FOR RCM CASES?

Notification: TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

Notification: Central Goods and Services Tax (Seventh Amendment) Rules, 2017

Notification: Seeks to extend the last date for filing the return in FORM GSTR-3B for the months of August to December, 2017

Circular: Filing of Special Leave Petition against Orders of Hon'ble High Courts staying Collection of Tax under GST- reg.

Highlight: Exemption u/s 54F - LTCCG - once entire net consideration is invested, the absence of completion certificate cannot be a ground to deny the benefit of deduction.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version