9911796707
TMI Blog2024 (5) TMIX X X X Extracts X X X X X X X X Extracts X X X X ..... ible to claim deduction mentioned u/s 30 to 43D of the Act. The assessee has claimed the impugned expenditure u/s 37 of the Act, which is a residual section and deals with general deduction. For any expenditure to be eligible for deduction under sub-section (1) of the Section 37, all the following conditions should be satisfied: (i) the expenditure should not be covered by sections 30 to 36 of the Act, (ii) expenditure should not be capital in nature, (iii) it should not be personal expenditure of the assessee, (iv) it should be incurred wholly and exclusively for the purpose of business or profession, (v) it should be incurred during the year and (vi) it should not be incurred for any purpose which is an offence or which is prohibited by law. As seen from the details on record that the expenses pertained to the car owned by the assessee. The assessee claimed that it was used by him for business purposes and no expenditure was claimed by the firm. This has not been disputed by Revenue. However, no evidence has been given by the assessee to support his claim that it was used only for the purpose of business and it was not at all used for any personal purpose. In absence of requisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two firms namely, M/s Shivam Alums Chemicals and M/s Rang Surgen Chemicals. He has earned the remuneration and interest on capital from partnership firm, M/s Shivam Alums Chemicals, amounting to Rs. 27,81,952/- and share of profit of Rs. 48,94,014/-. The assessee has earned share of profit of Rs. 1,14,328/- from M/s Rang Surgen Chemicals, which is exempted under section 10(2A) of the Act. The assessee has however claimed expenditure of Rs. 3,07,700/- and depreciation under section 32(1) amounting to Rs. 2,34,944/- from his income from remuneration and interest on capital, which was received from partnership firm. 4. During the assessment proceedings, the Assessing Officer asked as to why such expenses should not be disallowed and added to the total income. In response, the assessee filed its submissions and stated that the interest and remuneration income received from partnership firm are taxable in the hands of the partners and share of profit is exempted under section 10(2A) of the Act. The expenditure which was incurred for the purpose of earning such income, can be allowed as deduction from business income. The submission of the assessee was not accepted by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of profit which were exempted under section 10(2A) of the Act. The appellant failed to furnish necessary evidences regarding the expenses to substantiate his claim. 6. The submissions, case laws made by the assessee in the assessment order and Remand Report were examined by the Ld. CIT(A). The Ld. CIT(A) finds that all claims of the expenses incurred by the assessee for the business purposes are deductible expenses in the hands of the partnership firm but not in the hands of the assessee. The assessee cannot prove the expenses incurred for business without providing any evidences to prove such claim. To sum up the expenses should have a direct nexus between the expenditure and the business operation for the expenditure to be claimed for the business purpose . In the present case, though the assessee claimed that substantial expenditure was incurred for the purpose of the business, in the absence of material evidence, it cannot be said the impugned expenditure incurred by the assessee was not personal in nature. The Ld. CIT(A) has not accepted the claim of the assessee for want of documentary evidences. Though the assessee submitted the expenses incurred on his own car was for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof. Alternatively, if the expenses were claimed in the partnership firm then the same would be admissible expenses of the firm. The Ld. AR submitted that the income from remuneration from partnership firm and interest from partnership firm is taxable in the hands of the partner of the firm under the head income from business and profession under the provisions of section 28 of the Act. It is settled proposition of section 28 of the Act that while computing business income, deductions as provided under the provisions of section 30 to 37 are allowable. To support the claim of the assessee, the Ld. AR has relied upon the following decisions: 1. Aman Tandon vs. ACIT, 2019 ITL 9164 (Delhi Trib) 2. CIT vs. Jiviben, 69 ITR 219 (Guj. HC) 3. CIT vs. Ramniklal Kothari, 74 ITR 57 (SC) 4. CIT vs. K. G. Sadgopan, 5 CTR 342 (Mad. HC) 5. Virendra K. Mehta vs. ACIT, 106 ITD 437 (Mum Trib) 8. The Ld. AR of the assessee also submitted that the expenses were incurred for the purpose of business and not for personal purposes, and therefore all the conditions of section 37 of the Act were satisfied and the claim of deduction may be allowed in the interest of justice. 9. On the other hand, Learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geability to tax are mentioned u/s 28(ii) to 28(iii) of the Act. The profits and gains of any business which was carried on by the assessee at any time during the year is covered u/s 28(i) of the Act. Any interest, salary, bonus, commission or remuneration due to, or received by, a partner of a firm from the firm is chargeable to tax under the head profit and gains of business or profession u/s 28(v) of the Act. However, where any interest, salary, bonus, commission or remuneration by whatever name called, or any part thereof has not been allowed to be deducted u/ 40(b) of the Act, in computation of income of the firm, the income to be taxed shall be adjusted to the extent of amount disallowed. As per section 29, the income referred to in section 28 shall be computed in accordance with provisions contained in sections 30 to 43D of the Act. 11. Let us examine the facts of the case against the above statutory background. There is no dispute regarding the fact that assessee has received interest and remuneration of Rs. 27,81,952/- from the firm in which he is a partner. This is over and above share profit of the firm received by the assessee, which is not included in total income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
