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TMI Blog2018 (7) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer (hereinafter called "the AO") u/s 143(3) of the Income-tax Act, 1961 (hereinafter called "the Act") for AY 2010-11. 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "1. The learned CIT (A) erred on the facts and in law in rejecting the appellants claim on treating expenditure on Interest payment as not for the purpose of business thereby making an addition of Rs. 57,59,731/- inspite of being an NBFC The Honourable Tribunal may be pleased to order accordingly." 3. The assessee is engaged in the business of investment in securities and real estate. 4. The AO during the course of proceedings u/s 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses to the tune of Rs. 57,59,731/- . The AO disallowed the interest paid of Rs. 57,59,731/- and the same was added to the income of the assessee vide assessment order dated 31.12.2012 passed u/s 143(3) of the 1961 Act. The assessee filed first appeal before learned CIT(A) and contended with respect to the disallowance as was made by the AO and submitted as under:- "C. Ground No. 1: Disallowance of interest of Rs. 57,59,731/- a. The Ld. AO relied on the ratio of income earned vis-a-vis expenditure incurred while making disallowance u/s. 36(1)(iii). The expression "for the purpose of business" is wider in scope than the expression "for the purpose of earning income, profits and gains"- Medhav Jatia v. CIT [1979] 118 ITR 200 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change of opinion of the assessing officer which has resulted in disallowance of interest without giving assessee enough opportunity to substantiate his claim. f. The returns filed by assessee for Assessment Years 08-09 and 06-07 were assessed under sec. 143(3) of the Act wherein the claim for deduction of interest towards business expenditure was accepted by the department." 5. The learned CIT(A) dismissed the contention of the assessee vide appellate orders dated 11.12.2015,, by holding as under:- " 4.1 I have carefully considered the facts of the case and the submission made by the Id. AR, It is seen from the details that assessee received dividend income of Rs,4,75,422/-, interest Income of Rs. 7,36,087/- on Inter Corporate Depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of investment in securities and real estate. The assessee has borrowed money from M/s. Home Mehta & Sons P. Ltd. and M/s. Citi Corp Finance India Ltd. The assessee has declared 'income from operations' which consisted dividend income of Rs. 4,75,422/-, interest income of Rs. 7,36,087/- on ICD and income from Trust Property at Rs. 44,717/- . It was observed by authorities below that interest income received by the assessee was from old loans granted to sister concern. It was observed that there were no other activities carried out by the assessee during the year except sale of old shares on which capital gains to the tune of Rs. 76,06,320/- was earned. There was also some income from write back of excess provision of diminution of inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NBFC. Both the authorities below have concurrently held that no business activity was carried out by the assessee and there was no nexus between the interest earned and interest expended by the assessee. We do not find any infirmity in the orders of authorities below and find no reasons to deviate from concurrent findings of the authorities below. So far as allowability of interest expenses in preceding years, principle of res judicata is not applicable to income tax proceedings. Keeping in view factual matrix of the case and our detailed discussions above, we are inclined to dismiss the appeal of the assessee. We order accordingly.
7. In the result, appeal of the assessee is dismissed.
order pronounced in the open court on 12.07.2018 X X X X Extracts X X X X X X X X Extracts X X X X
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