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TMI Blog2022 (3) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... m Nationalized Bank. Since the benefit of the Balance sheet and Profit and Loss account of the assessee was not there before the Ld. CIT(A) who therefore made an adhoc estimate of allowable expenses and in view of the fact as stated above by us, noting that majority expenses have been incurred on fixed deposit interest alone, We consider it fit to restore this issue back to the Ld. CIT(A) to adjudicate the issue of expenses to be allowed against the interest income earned from Nationalized Bank to be adjudicated afresh after considering the facts of the case and in accordance with law in this regard. Assessee appeal allowed for statistical purposes. - ITA No. 1484/Ahd/2019 - - - Dated:- 23-3-2022 - Ms. Annapurna Gupta, Accountant Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, he allowed the assessee the benefit of expenses incurred for the purposes of earning interest income from banks to the extent of 5% of the interest income which amounted to ₹ 1,05,964/- and directed the balance to be subjected to tax u/s. 56 of the Act as income from other sources. It is against this order of the Ld.CIT(A) that the assessee has come up in appeal before us raising the following ground: 1. The Ld. CIT (A) has erred both in law and on facts in confirming addition of ₹ 2013310/- by giving deduction @ 5% of interest earned on account of expenditure incurred for generating income without appreciating facts that the appellant has incurred expenditure @ 84.6% after certain disallowances. The addition made on es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided that such interest is taxable in the hands of the appellant, then the proportionate expenditure is to be allowed. As per the working provided by the appellant, it had gross income of ₹ 1,87,53,950/- and taxable income (as per the return of income) was of ₹ 28,89,444/- and the percentage of gross income-vis-a-vis taxable income works out to 15.40%. Thus, it is the contention of the appellant that expenses to the extent of 84.60% be allowed and the taxable interest of ₹ 3,26,368/-only be added to the total income. In other words, the appellant had claimed expenses of ₹ 17,92,905/- to be allowed. However, this contention cannot be accepted for the reason that once the particular income is decided to be taxed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of-[section 38] ; [(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or-[fifteen] thousand rupees, whichever is less. Explanation.-For the purposes of this clause, family pension means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death :] (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) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banks. However, considering the fact of maintaining the accounts with the banks, visiting the bankers, maintaining the books of accounts etc, there might be some expenditure which can' be said to be incurred wholly and exclusively for the purpose of earning such income, 5% of the interest of ₹ 21,19,273/- worked out to ₹ 1,05,964/- is allowed so as to meet with the end of justice. Considering these facts, the appellant would get relief of ₹ 1,05,964/- whereas the balance amount of ₹ 20,13,3107- being net interest on deposits made with nationalized bank is sustained. The ground no.1 in relation to this disallowance is thus partly allowed. 6. We have heard both the parties and we have also gone through the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance being interest income from Co.Op. Bank and from Nationalized Bank being 44.49 lakhs and 21.19 lakhs, the major expenditure incurred related to fixed deposit interest expenditure amounting to 1.36 crores. Meaning thereby that out of total income reflected by the assessee of 1.87 crores, the majority expense relate to fixed deposit interest expenditure of 1.36 crores, which accounts for 73% of the total income. What exactly is the nature of the fixed deposit interest expenditure, there is no clarity, whether this has any relation with the earning of interest income from Nationalized Bank. Since the benefit of the Balance sheet and Profit and Loss account of the assessee was not there before the Ld. CIT(A) who therefore made an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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