TMI Blog2022 (1) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of the firm. In our view too, once the partner has withdrawn an amount from the firm, it becomes immaterial as to what end it put to use. The amounts withdrawn may be utilised by the assessee / partner for the purpose of meeting house-hold expenses, making investments or even for the purpose of paying tax and it is not within the purview of the Income-tax authorities to determine and dictate as to how the funds so withdrawn are put to use by the assessee / partner. Although, it is a settled proposition that the tax paid in respect of income is not a deductible expense, it is not the case here. Both the lower authorities below to have entirely misconstrued the factual matrix and have proceeded on an assumption that the assessee / partner was claiming expenditure in respect to income tax / advance tax paid, whereas, the assessee has only claimed expenditure in respect of interest on excess withdrawals made, which were utilised for the purpose of paying income tax / advance tax. Therefore, in our considered opinion, both the lower authorities have entirely missed the case in point and have made the impugned disallowance which cannot be sustained - we direct the Assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing officer further noted that the amount withdrawn from the firm had been utilised for payment of advance tax / income tax and, therefore, as per the Assessing officer, the said amount was not an allowable expenditure as the payment of income tax / advance tax was a personal liability of the assessee. The Assessing officer proceeded to disallow an amount of ₹ 12,86,361/- in assessment year 2015-16, an amount of ₹ 14,59,189/- in assessment year 2016-17 and amount of ₹ 17,04,380/- in assessment year 2017-18, being interest paid by the assessee on account of payment of income tax / advance tax. 2.1 Aggrieved, the assessee carried the matter to the First Appellate Authority challenging the addition / disallowance of interest. However, the contentions of the assessee did not find any favour with the First Appellate Authority and he confirmed the disallowance of interest in all the three years under consideration. 2.2 Aggrieved, the assessee is now before this Tribunal challenging the above such disallowance and the grounds raised by the assessee in the respective assessment years are as under:- ITA No. 5/Chd/2021 1. That the Ld. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act without there being any incriminating material having been found during the course of search relating to the said year and as such the assessment framed is illegal, arbitrary unjustified which merits to be quashed. 2. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the decision of the Hon'ble Delhi High Court rendered in the case of Meeta Gutgutia reported in 395 ITR 526 and the SLP filed by the revenue against this decision which stands dismissed vide order reported in 96 taxmann.com 468(SC) wherein it has been held that invocation of section 153A to re-open concluded assessments of assessment years earlier to search was not justified in absence of incriminating material found during search qua each such earlier assessment year besides other decisions rendered in the case of Kabul Chawla reported in 380 ITR 573, Mala Builders of the jurisdictional ITAT and as such the assessment framed is illegal, arbitrary unjustified 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of ₹ 14,59,189/- made on account of disallowance of interest paid to M/s Sham Fashion Mall whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g search in respect of the impugned addition and as such the assessment framed is illegal, arbitrary unjustified 4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of interest to the tune of ₹ 17,04,380/- paid on account of amount withdrawn for payment of taxes from M/s Sham Fashion Mall in utter disregard of the submissions made during the course of appellate proceedings which is arbitrary and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable 3.0 At the outset, the Ld. Authorised Representative (AR) submitted that only ground No.3 in all the three appeals was being pressed and that grounds Nos. 1, 2 and 4 were not being pressed. Accordingly, ground Nos. 1, 2 and 4 are dismissed as not pressed. 3.1 With respect to the only effective ground remaining, the Ld. AR submitted that the Assessing officer had made this disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the firm. In our view too, once the partner has withdrawn an amount from the firm, it becomes immaterial as to what end it put to use. The amounts withdrawn may be utilised by the assessee / partner for the purpose of meeting house-hold expenses, making investments or even for the purpose of paying tax and it is not within the purview of the Income-tax authorities to determine and dictate as to how the funds so withdrawn are put to use by the assessee / partner. 5.1 Although, it is a settled proposition that the tax paid in respect of income is not a deductible expense, it is not the case here. Both the lower authorities below to have entirely misconstrued the factual matrix and have proceeded on an assumption that the assessee / partner was claiming expenditure in respect to income tax / advance tax paid, whereas, the assessee has only claimed expenditure in respect of interest on excess withdrawals made, which were utilised for the purpose of paying income tax / advance tax. Therefore, in our considered opinion, both the lower authorities have entirely missed the case in point and have made the impugned disallowance which cannot be sustained. Therefore, while setting asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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