TMI Blog2022 (1) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. - ITA No. 388/SRT/2019 - - - Dated:- 21-1-2022 - Shri Pawan Singh, JM And Dr. A.L.Saini, AM For the Assessee : Shri Mehul R. Shah, CA For the Revenue : Ms Anupama Singla, Sr. DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1,Surat [in short the ld. CIT(A) ] in Appeal No. CIT(A), Surat-1/10530/2017-18 dated 18.07.2019, which in turn arises out of an order passed by the Assessing Officer under section143(3)of the Income Tax Act, 1961 [hereinafter referred to as the Act ]. 2. Grounds raised by the assessee are as follows: 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in partly confirming the action of assessing officer by sustaining the disallowance of interest expense of ₹ 3,44,516/- out of total disallowance of ₹ 5,40,627/- without appreciating the fact that the interest expense is not attributable to the business shown u/s 44AD. 2. Without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income to the tune of ₹ 1,96,111/- and has claimed the interest expenses to the tune of ₹ 5,40,627/-. The ld Counsel also states that assessee is also earning the commission which is being shown by him under the head income from other sources and claimed the expenses in respect of the commission earned. Therefore, those incomes which have been shown under the head income from other sources , the assessee has been claiming separate deduction under section 57(iii) of the Act. To prove his stand, Learned Counsel submitted before us, the Profit and Loss Account of Sunshine Corporation and balance sheet of Sunshine Corporation (vide pb 10-11). The ld Counsel submitted the ledger account of Sunshine Corporation which is placed at paper book page no. 12. The ld Counsel also submitted the personal balance sheet of assessee wherein assessee claimed the interest expenses to the tune of ₹ 5,43,864/- (vide pb-13). 6. Based on the above noted facts, we are of the view that if the assessee has shown the income under the head income from other sources (in addition to the income declared under section 44AD of the Act), then the assessee is entitled to claim the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the admissibility of the expenditure under s. 57(iii) and, therefore, if in a particular assessment year there was no income, the expenditure would not be deductible under that section. The revenue relied strongly on the language of s. 37(1) and, contrasting the phraseology employed in s. 57(iii) with that in s. 37(1), pointed out that the legislature had deliberately used words of narrower import in granting the deduction under s. 57(iii). S. 37(1) provided for deduction of expenditure laid out or expended wholly and exclusively for the purpose of the business or profession in computing the income chargeable under the head Profits or gains of business or profession . The language used in s. 37(1) was laid out or expended-for the purpose of the business or profession and not laid out or expended-for the purpose of making or earning such income as set out in s. 57(iii). The words in s. 57(iii) being narrower, contended the revenue, they cannot be given the same wide meaning as the words in s. 37(1) and hence no deduction of expenditure could be claimed under s. 57(iii) unless it was productive of income in the assessment year in question. This contention of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y anomalous result and it is difficult to believe that the legislature could have ever intended to produce such illogicality. Moreover, it must be remembered that when a profit and loss account is cast in respect of any source of income, what is allowed by the statute as proper expenditure would be debited as an outgoing and income would be credited as a receipt and the resulting income or loss would be determined. It would make no difference to this process whether the expenditure is X or Y or nil, whatever is the proper expenditure allowed by the statute would be debited. Equally, it would make no difference whether there is any income and if so, what, since whatever it be, X or Y or nil, would be credited. And the ultimate income or loss would be found. We fail to appreciate how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting and the interpretation of s. 57(iii) cannot be different. The deduction of the expenditure cannot, in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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