2023 (3) TMI 1345 - AT - Income Tax

Allowability of interest expenses under Income from Other Sources - interest paid to SBI loan - assessee has not shown any income from the said property - assessee was requested to show cause as to why the said interest expenses should not be disallowed u/s. 57 - HELD THAT - During the appellate proceedings assessee could not demonstrate as to how the professional income was Income from Other Sources and how the loan taken from the bank was utilized exclusively for the purpose of earning said income. Thus the assessee has not proved allowability of interest expenses either u/s. 57 or u/s. 37 of the Act. In the absence of evidence from the assessee, the disallowance made by the AO does not require any interference. Even before us, no materials placed by the assessee, neither written submission nor Paper Book filed before us. The assessee has not given Power of Attorney to any Authorized Representative to appear for the above case. In the absence of same, we have no hesitation in confirming the order passed by the Lower Authorities. Thus the grounds raised by the assessee are devoid of merits and the same is hereby dismissed. Appeal filed by the Assessee is hereby dismissed.

Summary

Issues Involved:
The issues involved in the judgment are disallowance of interest expenses claimed by the Assessee under "Income from Other Sources" and the confirmation of addition by the Ld. CIT(A) regarding the same.

Disallowance of Interest Expenses:
The Assessee, a Non-Resident Indian, filed a Return of Income for A.Y. 2016-17 claiming a loss of Rs.2,90,621/-, including interest expenses of Rs. 11,45,971/- paid to SBI loan. The Assessing Officer disallowed the interest expenses under section 57 of the Income Tax Act, as the Assessee did not show any income from the property but earned professional income. The Assessee contended that the interest expenses were allowable under section 57, as the loan was taken for self-occupied property used for professional work. However, the Assessing Officer held the explanation unacceptable and disallowed the expenses. The Ld. CIT(A) confirmed the addition of Rs. 11,45,971/- by emphasizing that the Assessee failed to establish the link between the claimed professional income and the loan expenses, as required by the Act.

Appeal and Dismissal:
The Assessee appealed against the Ld. CIT(A)'s decision, raising grounds related to the assessment order, disallowance of interest expenses, penalty proceedings, and charging of interest under various sections of the IT Act. Despite multiple hearings, the Assessee did not appear, indicating a lack of interest in pursuing the appeal. The Ld. Sr. D.R. argued that the Assessee failed to provide evidence of income from other sources, justifying the disallowance of interest expenses. The Appellate Tribunal, after considering the available materials, upheld the decision of the Lower Authorities. The Tribunal noted the Assessee's failure to prove the professional income as "Income from Other Sources" or establish the utilization of the bank loan for earning said income. With no additional evidence presented by the Assessee, the Tribunal dismissed the appeal, confirming the disallowance of interest expenses and the assessment order.