9911796707
TMI Blog2020 (4) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO to allow deduction of interest out of the interest received from the National Stock Exchange. - Decided against revenue - Shri Rajesh Kumar (AM) And Shri Ram Lal Negi (JM) For the Assessee : Shri Neelkanth Khandelwal (DR) For the Revenue : Shri P. Daniel/V. Jenardhanan (DRs) ORDER PER BENCH These appeals have been filed by the revenue against the common order dated 30.09.2016 passed by the Commissioner of Income Tax (Appeals)-49 (for short the CIT(A), Mumbai, for the assessment years 2010-11, 2011-12 and 2012-13, whereby the Ld. CIT(A) has partly allowed the appeals filed by the assessee against the assessment orders passed u/s 143 (3) r.w.s. 153A of the Income Tax Act, 1961 (for short the Act ). Since, these appeals pertain to the same assessee and the department has raised the identical issue in all the three appeals, these were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience. 2. Since, the facts of these cases are similar, we take the facts of the case pertaining to the AY 2010-11 as a lead case. 3. The assessee engaged in the business of share in stock brokering, investment and trading in shares and secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uous. 5(a). On the other hand, the Ld. Departmental Representative Sh. P. Daniel, Senior Counsel fairly admitted that the Tribunal has allowed the appeal of the assessee and in view of the said order, the Department s appeals have become infructuous. 6. We have perused the material on record including the decision of the coordinate Bench in assessee s appeals. We notice that the facts of the case pertaining to the AYs. 2011-12 and 2012-13 are identical except the interest income claimed by the assessee and the issues involved in all the three assessment years are identical. The coordinate Bench has decided the assessee s appeals ITA No. 6548/Mum/2016 for the AY 2010-11, ITA No. 6549/Mum/2016, for the AY 2011-12 and ITA No. 6550/Mum/2016 for the AY 2012-13 by following the decision of the coordinate Bench rendered in the assessee s own case for the AYs. 2008-09 and 2009-10 in ITA No. 3225/Mum/2013 and 7518/Mum/2013 and allowed the assessee s appeals. The findings of the coordinate Bench in the assessee s appeals for the AYs. 2010-11, 2011-12 and 2012-13 read as under:- 10. We have considered rival contentions and carefully gone through the orders of the authorities below. We had als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A guidelines of the RBI and as the account of the assessee has turned NPA long back, the banks have stopped providing the interest, this should not come in the way of allowing the interest as the liability and obligation of assessee to pay interest persists. 15. The break-up of interest expenditure debited to the profit and loss account are as under:- A.Y. Interest debited to the P L account Break-up of interest expenditure debited to the profit and loss account Remarks 2010-11 ₹ 8,59,64,086 l.MMCB- ₹ 48,63,019 2. GTB Overdraft - ₹ 7,50,1 5,304 3. GTB Bank guarantee ₹ 59,85,000 4. HDFC-₹ 3,003 5. Service tax ₹ 97,760 Interest received onFixed deposits Rs. 1,88,64,396 and Therefore, the interest Expenditure is Restricted to the Income earned. 16. With regard to applicability of provisions of Section 43B, we observe that the same are applicable to income computed under the head business income only and are not applicable to incomes under the head income from other sources . 17. As per our considered view if the bank later on waives the interest to be paid to them by the assessee, the provisions of section 41(1) shall not be applicable but the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us is whether the assessee is entitled to deduction of interest incurred to various banks from whom the funds were arranged from the interest received from National Stock Exchange which is assessable under the head income from other sources . For the sake of convenience and better understanding, the provisions of section 57(iii) are reproduced below : '57. The income chargeable under the head Income from other sources shall be computed after making the following deductions, namely :- (i), (ia) (ii), (iia) ** ** ** (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income; (iv).....' The interest is not in doubt or disputed that the interest received from the National Stock Exchange on the total amount of deposit with it is assessable as income from other sources . So far as the question of deduction qua interest to various banks is concerned, we are of the opinion that if there is nexus between the interest received and interest to banks on borrowings, the same is to be allowed as deduction u/s 57(iii) of the Act. A plain reading of provisions of section 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of various banks on the money borrowed for the purpose of FDRs for security and also for bank guarantees to NSC. Accordingly, we set aside the order of Id.CIT(A) and direct the AO to allow deduction of interest of ₹ 2,74,88,000/- out of the interest received from the National Stock Exchange. This ground is allowed in favour of the assessee. 9. The issue raised in ground no.4 is against the non allowance of credit of tax ₹ 38,79,584/-. This ground was taken before the Ld. CIT(A) who dismissed the ground by holding that the assessee was free to move an application u/s 154 of the Act before the AO and accordingly, claim the credit of TDS and thus dismissed the appeal of the assessee. The Id. AR submitted before us that the AO has not allowed the credit of TDS deducted on behalf of the assessee amounting to ₹ 38,79,584/-. At the time of hearing, the ( Id.AR submitted that the Id. CIT(A) also erred in directing the assessee to move an application u/s 154 of the Act instead of issuing direction to the AO to allow credit of TDS which was a legitimate claim to which the assessee was legally entitled. 10. On the contrary, the Id. DR relied heavily on the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
