TMI Blog2021 (6) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... the only year in which the assessee had made this claim and that similar claim had been made in earlier years also since a portion of the investment had been made out of loans taken in earlier years. In the absence of the necessary facts relating to the issue, we are of the view that it would not be fair to adjudicate the issue either ways. That it would be in the interest of justice to restore the matter to the AO for reexamination after considering all facts relating to it. Issue of claim of deduction u/s 57 (iii) is restored back to the AO to be decided in accordance with law after considering all facts relating to the same - Decided in favour of assessee for statistical purposes. - ITA No. 21/Chd/2019 - - - Dated:- 7-6-2021 - Smt.Annapurna Gupta, Accountant Member And Shri R.L. Negi, Judicial Member For the Assessee : Shri Parikshit Aggarwal, CA For the Revenue : Shri Ashok Khanna, Addl.CIT ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: The above appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)- 3 [ in short the Ld. CIT(A)], Ludhiana dated 14. 11. 2018 relating to assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assistant Commissioner of Income Tax, Circle VII, Ludhiana Re : Mr Ravi Nandan Kumar Prop. M/s Rahul Sales, 606/2916, Krishna Nagar, Ludhiana PAN: AGQPK5052L Assessment Year: 2014-15 Sub : Assessment Proceedings under section 143(3) of the Income Tax Act, 1961 ( the Act ) Respected Sir, With regard to the captioned Subject, it is humbly submitted that the Case of the Assessee for the year under consideration has been picked by your goodself under Section 143(3) of the Act. We have already furnished Replies to your goodself s Questionnaire. Further, it is submitted that your goodself has asked to explain that how the expenses claimed under Section 57 of the Act are eligible for deduction against Income from Other Sources. Regarding the above, it is submitted that the Assessee has taken Loans from the Cholamandalam investment and Finance Company Limited and TATA Capital Housing Finance Limited and invested the same as Loan in the Firm named M/s Rahul Sales and in the Mutual Funds. Due to this reason, the Assessee has claimed the Interest paid on the above said Loans as an expenditure under Section 57 of the Act. We hope that your goodself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited and Tata Capital Housing Finance Limited are his personal Loans. Further, the Assessee has various other personal Assets in the form of immoveable Properties arid vancnA other personal Unsecured Loans It is a landmark principle that money has no colour and entire money of the Assessee, coming from any source, comes m a common kitty. It should De the discretion of the Assessee that where he had applied his sources The above Investment in M/s Rahul Sales is his personal Investment, whereas he has raised Loans from various institutions on his personal account. It is not the Revenue who will suggest that which Loan should be taken By the Assesses and where should it be invested 01 whether no loan should be taken by the Assessee These are not the business assets and business loans where the direct nexus of funds and its application should be taken into account, In case of personal assets and personal sources, it is the discretion of the Assessee to apply any of his sources in any of his personal assets. In our case too, the Assessee has raised the Loans from Cholamandalam Investment and Finance Company Limited and Tata Capital Housing Finance Limited in the preceding ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g such income. Thus, expenses claimed u/ s 57 amounting to ₹ 40, 53, 426/- are disallowed and are added to the total income of the assessee. Penalty proceedings u/ s 271 (1)(c) for filing inaccurate particulars of income are being initiated separately. (Addition of ₹ 40, 53, 426/-) 5. The Ld.Counsel for the assessee drew our attention to the order of the Ld. CIT(A) and stated that despite reiterating his contention which were made before the AO, before the CIT(A) also, as reproduced at para 4.1 of the order, the Ld.CIT(A) upheld the disallowance re- emphasizing the findings of the AO that the assessee had failed to prove the nexus between the loan deduction and interest paid thereon without specifically dealing with the contentions of the assessee. He drew our attention to para 4. 2 to 4.4 of the order as under: 4.2 I have carefully considered the facts of the case. I am inclined to agree with the contention of AO. The provisions of the Income-tax Act relating to allowances disclose that the expenditure or outgoing sought to be deducted should bear a character which has a connection with or relation to the particular activity which produces the income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al construction of the language of section 57(iii) of the Act, irresistibly leads to the conclusions that to bring a case within that section it is not necessary that any income should in fact have been earned as a result of the expenditure. What section 57{iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income. The section does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction it does not say that the expenditure shall be deductible only if any income is made or earned (CIT vs. Rajendra Prasad Moody (1978), Taxation 51 (3)-52, 115 ITR 519 (SC) : CIT vs. Murli Manohar (1998) IX SITC 673 (All) : CIT vs. Rampur Timber Turney Co. Ltd. (1981) 129 ITR 58 (All.) : CIT vs. Administrator General of Madras (1998) 142 Taxation 85 (Mad.)). The Gujarat High Court in Padmavati Jaykrishna vs. CIT (1981) 131 ITR 653 has held that in order to decide whether an expenditure is a permissible deduction under section 57(iii), the nature of the expenditure must be examined. Also the Gujarat High Court in the case of Sarabhai Sons (P) Ltd. vs. CIT(1993) 113 Taxation 407, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been adjudicated dehors the facts relating to it. That despite the specific submissions of the assessee before the lower authorities of the investment having been made out of interest bearing funds and the assessee having filed certain copies of accounts relating to the loan taken and investment made, the findings of the lower authorities that the assessee was unable to establish nexus between the two, does not deal with the aforestated submissions at all. At the same time, the Ld. Counsel for the assessee was also unable to demonstrate before us as to how the submissions of the assessee justified his claim, though he contended that this was not the only year in which the assessee had made this claim and that similar claim had been made in earlier years also since a portion of the investment had been made out of loans taken in earlier years. 8. In the absence of the necessary facts relating to the issue, we are of the view that it would not be fair to adjudicate the issue either ways. That it would be in the interest of justice to restore the matter to the AO for reexamination after considering all facts relating to it. 9. In view of the above the issue of claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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