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DEPUTY COMMISSIONER OF INCOME TAX Versus MRS. MAYURIKA S. PODDAR

1997 (5) TMI 437 - BOMBAY HIGH COURT

ITA No. 6828/Mum/1990; Asst. yr. 1987-88 - Dated:- 29-5-1997 - ORDER I. S. VERMA, J.M. : This appeal by the Revenue is directed against the order of the CIT(A), dt. 22nd March, 1990. The first ground taken in this appeal is as under : On the facts and in the circumstances of the case and in law the learned CIT(A) erred in directing the AO to allow deduction of interest of ₹ 7,06,824 paid by the assessee abroad on the loan incurred for the purpose of Indian shares and debentures though tax .....

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wable. He has further submitted that the having not deducted tax at source from the payment of interest made to non-residents, as required under s. 195, the AO was right in disallowing the deduction of the same from capital gain. He further submitted that the assessees case before the AO was deduction from capital gains whereas before the CIT(A) the assessee made alternative plea for claiming deduction out of her income from other sources which the CIT(A) has accepted without allowing the AO an .....

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h Court in the case of C. G. K. Naidu vs. CIT (1968) 69 ITR 696 . As regards the acceptance of alternate plea of the assessee by the CIT(A), the assessees counsel has supported the order of CIT(A). 3. We have considered the rival submissions and have gone through the orders of the lower authorities. From the facts and circumstances of the case it is noticed that at the time of assessment the assessee had claimed deduction of interest paid on loans taken from non-residents against her income from .....

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ot doing any business or profession and, therefore, the provisions of s. 40A(2) were not applicable. The other facts relating to this issue are that the assessees who was a NRI had raised certain income from NRIs in USA for the purpose of investment in shares of the Indian companies in India. The source of assessees income in India were capital gains on sale of securities and shares, dividend and interest from bank. During the period relevant to the asst. yr. 1988-89 the assessee had paid intere .....

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has held so) then the provisions of s. 40A(2) were rightly held to be not applicable but as far as the consideration of the assessees alternate plea, which was absolutely a fresh one, and the AO had no chance to deal with the same, should not have been accepted without allowing the AO an opportunity of being heard. 5. Even otherwise, we are of the opinion that for acceptance of the assessees alternate plea the provisions of s. 195 and s. 58(1)(a)(ii) requires to be considered in detail. Under t .....

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son concerned as defaulter for contravention of the provisions of s. 195 and will be justified in taking of consequential actions such as recovery of TDS or disallowance of expenditure by invoking the provisions of s. 40A(2) or s. 58(1)(a)(ii) as the case may be. 6. Similarly, if the person concerned is aggrieved by the decision of IT authorities holding him defaulter for not deducting tax at source, as required under s. 195, then, the person has only one remedial recourse which is in the form o .....

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ght of our aforesaid observations after allowing the assessee an opportunity of being heard. 8. Ground No. 2 : On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the AO to allow deduction of ₹ 19,108 for loss on account of changes in foreign exchange rate and deduction from the capital gain ignoring the fact that the subsequent remittance has no nexus with the transfer of shares and securities. We have heard the learned Departmental Represen .....

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TR9(Delhi) , Addl. CIT vs. K. S. Gupta [1979]119ITR372(AP) and CIT vs. Maithreyi Pai [1985]152ITR247(KAR) . 9. We have considered the rival submissions as well as the facts and circumstances of the case. We have also gone though the cases relied on by the assessees counsel. After careful consideration of the material before us, we are of the opinion that the CIT(A) was justified in allowing the assessees claim because, as has been held by the Karnataka High Court in the case of Kirloskar Asea Lt .....

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on 13th April, 1989 which alone had the effect of opening the already completed assessment under s. 143(1) The learned Departmental Representative has submitted that the issues agitated by the assessee before the CIT(A) were not raised while objecting the assessment framed under s. 143(1) and, therefore, the assessee could not agitate the same in appeal against the order under s. 143(3). The assessees counsel, on the other hand, submitted that the ground raised by the Revenue do not arise out o .....

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