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TMI Blog2015 (8) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and also deleting an addition of Rs. 10,03,861/- on account of various expenses incurred to earned under the head "income from other sources" as these expenses are not allowable expenditure under sub-section (iii) of Section 57 of the IT Act. ii. The ld. CIT(A) has ignored the decision of Gujarat High Court in the case of Smt. Padmavati Vs. Addl. CIT, Gujarat 166 ITR 176, where in the Hon'b;e Court has held that "where assessee declare income from other source interest on amount borrowed to pay annuity deposit is not allowable as deduction under sub-section (iii) of section 57 of the Income Tax Act, 1961. iii. The appellant craves leave for reserving the right to amend, modify alter, add or forego any ground(s) of appeal at any time b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computer system of the assessee is having some problem therefore he is unable to provide the details for A. Y. 2005-06 & 2006-07 in which these loans were taken. In the absence of these details, it treated that either rest of the funds are utilized to meet out the assessee's personal liabilities or have been invested with the companies and firms from where the assessee received the share profit which is exempt income in his hand. I therefore, have no option but to disallowed the same treating that these expenses are not incurred wholly and exclusively for the purpose of earning the income under the head income from other sources and accordingly an addition of Rs. 39,76,476/- is made to the return income of the assessee. Penalty pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the expenditure incurred and the income sought to be earned." 3. While making disallowance of expenditure of Rs. 10,03,861/-, the Assessing Officer had given reasoning, which is reproduced as under: " 5. Apart from the above the assessee has also claimed the expenses under the following heads:- (i) Salary paid to Staff Rs. 5,28,000 (ii) Depreciation Rs. 23,725 (iii) Printing & Stationery Rs. 8,190 (iv) Mise. Expenses Rs. 66,221 (v) Bank Charges Rs. 1,07,687 (vi) Car Insurance Rs. 1,42,402 (vii) Telephone expenses Rs. 25,122 (viii) Car Maintenance Rs. 1,02,514 Total Rs. 10,03,8611/ Vide order sheet entry dated 29/10/2009 the AR of the assesse was required to explain that how the expenses claimed as above are wholly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of the assesse in the Firms and AOPs. The claim of the expenses under other heads is also not acceptable in view of the facts that the assesse is having income from the share profit of Firms and AOPs which is exempt in the hands of the assesse, and income under the head business and profession and the income from short term capital also. Therefore, the claim of the assesse is disallowed, treating that these expenses have not been incurred to earn the income under the head income from other sources. Therefore, it is treated the same have been incurred either to earn the exempt income in the shape of share profit form Firms and AOPs or in connection with the transactions of income from short term capital gain. Therefore, the same is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestments and number of transactions it may not be pragmatic to have the direct link of each and every item but the overall appraisal of the facts and the statement of accounts submitted by the assessee justifies the claim of the assessee for deduction of the interest paid on borrowings u/s 57(iii) of the Act. 6.6 The Assessing officer has not placed any material on record to substantiate his allegation that the amount of borrowed funds on which interest payment of Rs. 39,76,476/- has been disallowed by him were not used in earning the income offered to tax by the assessee u/s 56 of the Act. It is settled law that no tax liability can be cast upon an assessee on the basis of presumption, conjecture and surmise. Statute places onus of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the assessing officer has not brought any cogent material on record, which could suggest that the expenses claimed by the assessee as deduction u/s 57(iii) of the Act were not incurred wholly and exclusively for the purposes of earning income under the head income from other sources offered to tax u/s 56 of the Act. (iv) That neither any verification nor any investigation has been done by the assessing officer to dislodge the submissions of the assessee so much so it was concerned with the claiming of deduction u/s 57(iii) of the Act. (v) That under the income tax laws either by way of section 131 or by way of section 133(6) of the Act, the assessing officer has been given enormous power to carry out verification and verification to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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