ITAT directs AO to allow deduction for consultancy receipts, remits various issues for reconsideration

The ITAT partially allowed the assessee's appeal, directing the AO to treat 50% of consultancy receipts as expenditure, allowing a deduction of Rs. 17,65,696, and the remaining as salary income. The ITAT remitted the lack of opportunity for rectification of Form 26AS and the misclassification of interest income issues back to the AO for reconsideration, with instructions to allow the submission of additional evidence. The matter of disallowance of deduction for interest on housing loan was remitted for verification, and the non-granting of credit for TDS and Self-Assessment Tax was also sent back to the AO for fresh consideration.

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Issues:
1. Discrepancy in salary income between Form 26AS and income declared in return.
2. Lack of opportunity to rectify Form 26AS for consultancy income.
3. Misclassification of interest income as consultancy income.
4. Disallowance of deduction for interest on housing loan.
5. Non-granting of credit for Tax Deducted at Source and Self-Assessment Tax paid.

Issue 1: Discrepancy in salary income:
The assessee's appeal contested the addition of Rs. 40,42,376 due to the variance between salary income in Form 26AS and the return. The CIT (A) upheld the AO's decision. The assessee explained receiving salary from Google India Pvt. Ltd. and consultancy income, but lacked evidence for consultancy expenditure. The ITAT directed 50% of consultancy receipts to be treated as expenditure, allowing a deduction of Rs. 17,65,696 and treating the balance as salary income.

Issue 2: Lack of opportunity for rectification:
The AO did not provide the assessee a chance to rectify Form 26AS regarding consultancy income. The ITAT remitted the matter to the AO for reconsideration, granting the assessee an opportunity to present all relevant details and evidence.

Issue 3: Misclassification of interest income:
The AO incorrectly categorized interest income as consultancy income. The ITAT remitted this issue back to the AO for fresh consideration along with other grounds, allowing the assessee to submit additional evidence.

Issue 4: Disallowance of deduction for interest on housing loan:
The CIT (A) remitted this matter to the AO for verification, and the ITAT found it unnecessary to interfere with this decision. The ITAT directed the AO to reconsider this issue along with others, providing the assessee with an opportunity to present relevant information.

Issue 5: Non-granting of credit for TDS and Self-Assessment Tax:
The AO did not credit Tax Deducted at Source and Self-Assessment Tax paid. The ITAT remitted this issue back to the AO for fresh consideration, instructing the AO to admit any new evidence submitted by the assessee and decide in accordance with the law.

In conclusion, the ITAT partially allowed the assessee's appeal, providing detailed directions for reconsideration of various issues by the AO, ensuring the assessee's right to be heard and present relevant evidence.

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