Tribunal Rules in Favor of Assessee on Appeal Issues

The Tribunal allowed the appeals, deciding in favor of the assessee on both issues. It held that the non-admittance of the appeal by CIT(A) due to unpaid tax liability was unjustified, considering the circumstances, and proceeded to adjudicate the appeals. Additionally, it ruled in favor of the assessee regarding the disallowance of bank charges as expenses while calculating interest income, allowing the deduction for bank charges against the interest income assessed. The judgment was pronounced on 21st May 2020, in favor of the assessee.

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Issues:
1. Non-admittance of appeal by CIT(A) due to unpaid tax liability.
2. Disallowance of bank charges as expenses while calculating interest income.

Analysis:

Issue 1: Non-admittance of appeal by CIT(A)
The appeals were filed against the order of CIT(A) dated 31.10.2014 under section 153A r.w.s 143(3) of the Income-tax Act, 1961. The primary contention was the non-admittance of the appeal by CIT(A) based on the unpaid tax liability. The assessee argued that due to the immovable property provisionally attached and seized jewellery, she lacked cash liquidity to pay the tax dues. However, the taxes were later paid from the sale proceeds of a house property. The Tribunal deliberated on whether such appeals, initially rejected by CIT(A), could be decided at this stage. Considering the circumstances, including the demise of the assessee, the Tribunal deemed it appropriate to admit the appeals and proceed to decide on merits. The Tribunal found no merit in remanding the issue back to CIT(A) and proceeded to adjudicate the appeals.

Issue 2: Disallowance of Bank Charges
The second issue pertained to the disallowance of bank charges as expenses while calculating interest income for various assessment years. The assessee maintained accounts with HSBC, Switzerland, and paid bank charges against the interest received. The contention was that these charges were incurred for managing the accounts, and the income declared was net off of bank charges. The Tribunal referred to section 57(1) of the Income Tax Act, emphasizing that expenses for earning income should not be capital in nature and should have a clear nexus with the income sought to be earned. Citing the case of Seth R. Dalmia vs CIT [1977], the Tribunal held that the bank charges related to interest income were allowable as expenditure in the hands of the assessee. The Tribunal directed the Assessing Officer to allow the deduction for bank charges against the interest income assessed. Consequently, all appeals filed by the assessee were allowed.

In conclusion, the Tribunal upheld the appeals, addressing both issues raised by the assessee regarding the non-admittance of the appeal by CIT(A) and the disallowance of bank charges as expenses. The judgment was pronounced on 21st May, 2020, in favor of the assessee.

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