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TMI Blog2023 (4) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 57. This aspect of the matter was also examined by the AO and assessee has filed all the replies which were called upon by the AO. No infirmity in allowing the interest paid by the AO and therefore, order of ld. PCIT cannot be sustained, because on merits the assessment order is neither erroneous nor prejudicial to the interest of the Revenue and therefore, on merits, the appeal of the assessee is allowed. - ITA No. 1709/Mum/2022 - - - Dated:- 31-3-2023 - Shri Amit Shukla, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri Suchek Anchaliya For the Revenue : Shri Biswanath Das ORDER PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 30/03/2022, passed by Ld. Pr. CIT, Mumbai-19, in his revisionary jurisdiction u/s.263 of the Act for the A.Y.2017-18. 2. In the grounds of appeal, the assessee has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income Tax (Pr. CIT) erred in invoking the provisions of section 263 of the Act and setting aside the order of the Ld. A.O. 2. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/10/2013. He also submitted that during the course of assessment proceedings, specific question was raised by the AO and in response, the assessee had filed the entire details alongwith requisite documents before the AO alongwith copy of the ledger account of the firm as well as the ledger account of the statement of the term loan in the books of the assessee. The submissions of the assessee have been incorporated in the impugned order. However, the ld. PCIT cancelled the assessment order after observing and holding as under:- 5.4 It has been claimed that sufficient evidences were submitted in support of the claim before the AO who had examined the issue. On perusal of the Assessment records it is seen that the assessee has submitted during the course of assessment proceedings that in the FY 2013-14 he took term loan from SBI amounting to Rs.4 Crores which he deposited in his Partnership firm M/s. Ritesh Exports, it was further claimed that he earned interest amounting to Rs.46,23,832/- from Ritesh Exports and gave interest amounting to Rs 37,16,200/- on SBI Term Loan and the same was claimed u/s 57 of the Act against the interest income earned from M/s. Ritesh Exports. To sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus between the relevant income and expenses being claimed towards it has to be established. The Assessee is required to substantiate its claim of expense of interest by not only providing evidence of genuineness of the expenses but also the nexus between these expenses with the income from other sources i.e the interest income in this case. As mentioned above although the assessee submitted interest certificate paid against the loan borrowed from the bank (which were also not before the AO), he has not furnished any documentary evidences to confirm that he received interest from M/s. Ritesh Exports. Hence, the nexus between the income earned of Rs. 46,50,899/- and interest expenses of Rs.37,16,200/- being claimed is still not established. Thus, the Assessing Officer is accordingly directed to confirm the payment of interest by Ritesh Exports and verify the nexus with income earned by considering the relevant documentary evidences and reframe the assessment. 6.2 In view of the above, the assessment order dated 06.12.2019 passed u/s. 143(3) of the Act, for AY 2017-18 is accordingly set aside for passing the order afresh considering the above direction, after giving the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the issue involved are that, assessee is a partner in the firm M/s. Ritesh Exports and he has taken a term loan from SBI of Rs.4 Crores which was deposited in his partnership firm but not towards the capital account of the partner. From the perusal of the profit and loss account of the assessee, we find that assessee has received interest on capital from M/s. Ritesh Exports of Rs.17,60,000/- and there is a separate income of interest on loan received from M/s. Ritesh Exports at Rs.46,23,832/-. This term loan from SBI was taken in the F.Y. 2013-14 and was immediately deposited to the partnership firm from where assessee has been receiving interest from firm and from that interest income; the assessee has been paying interest to the bank. In all the earlier years, the claim of interest is only out of interest income from the firm which has been accepted in scrutiny proceedings u/s. 143(3). In support, the assessment order for the A.Y.2014-15 and 2015-16 has been filed in the paper book. In the computation of income, the assessee had shown interest income and interest expenditure in the following manner:- MUKESH SHAH A.Y.2017-18 Person ..... X X X X Extracts X X X X X X X X Extracts X X X X
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