TMI Blog2023 (3) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... e s capital account in the partnership firm as the opening debit balance and closing debit balance was having a major difference as closing debit balance was much more higher. The assessee has paid net interest to the partnership firm but at the same time assessee has withdrawn more money from the partnership firm that actually invested in the partnership firm. Tribunal has also distinguished the factual aspect in assessee s case and in case in CIT v/s. Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT ] The facts are exactly identical to A.Y. 2013-14 and therefore, it is noticed that as per specific provision of Section 28(v) any interest, salary etc. earned by a partner from a partnership firm is taxable under the head profit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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. It is the purpose of the expenditure that is relevant in determining the applicability of section 57(iii) and that purpose must be making or earned of income. Section 57(iii) does not require that purpose must be fulfilled in order to qualify the expenditure for deduction. 3. The assessee filed return of income for A.Y. 2015-16 on 30.09.2015 declaring total income at Rs. NIL. The case was selected for the limited scrutiny and notice under Section 143(2) alongwith questionnaire was issued to the assessee on 11.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the firm purchase premises and in F.Y. 2007-08 sales rose to Rs. 6,41,61,350/- and net loss was Rs. 71,4,582.66/-. This was due to higher depreciation of Rs. 21,98,978/-, bank interest of Rs. 15,04,425/- and advertisement expense of Rs. 24,51,576/-, rent expense and higher salary expenses of the employees. Because of these aspects the assessee s share of 40% loss was debited to the capital account. At that time rate of bank interest was 11% and in year 2011 the assessee firm purchased 8(eight) shops at Ahmedabad for Rs. 24 crores and additional capital expenditure for Air-Condition and Interior for about Rs. 4 crore which was acquired by taking loan of 90% from Cosmos Co. Op. Bank Ltd. @ 14%. Because of this expenditure of depreciation, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it under the head income from other sources. Thus, the Ld. A.R. submitted that even in the past years assessee had earned income under the head income from other sources. 6. The Ld. D.R. submitted that the Tribunal in A.Y. 2013-14 has confirmed the disallowance on the similar circumstances, hence the present appeal may be dismissed. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the mention of the assessee that the loan was taken for expansion of business from A.Y. 2007-08 onwards the fact remains that the position in A.Y. 2013-14 has remained similar in present A.Y. 2015-16 as relates to capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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