TaxTMI 
TaxTMI 
2014 (7) TMI 867
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.... of section 50C is wrong, illegal and against the facts of the case speciality when no reference is made to the valuation officer. Circle rate was 258000/- sales consideration was 1,60,000 4. The relevant material facts are as follows. During the relevant previous year, the assessee had sold a piece of land for stated consideration of Rs. 1,64,000. However, since stamp duty valuation of this land was Rs. 2,58,000, the Assessing adopted the same for computation of long term capital gain. The assessee's contentions, inter alia, to the effect that the stated consideration was fair market value of the land in question "as the land was situated in underdeveloped area, there was unauthorised possession of the land and as there were number of pits in the land" and "as such, the circle rate fixed in the area could not apply" was simply brushed aside. Aggrieved, assessee carried the matter in appeal but learned CIT(A) also rejected the grievance of the assessee and observed that " I find that the AO was justified in taking the sale consideration at Rs. 2,58,000 as per the provisions of Section 50 C because the assessee (appellant) could not produce any evidence showing that the market ....
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....to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law." 7. As there is no binding judicial precedent contrary to what has been held by Hon'ble Calcutta High Court, as above, the esteemed views of Their Lordships, even though from a non jurisdictional High Court, bind us as well. 8. In the light of the above legal position, the plea of the assessee, as set out in the ground of appeal, is indeed well taken. The prevailing legal position is now like this. Once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities, it is incumbent upon the Assessing Officer to refer the valuation of said land or building to the departmental valuation officer. In the prese....
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....for the purpose of making or earning income from FDRs, claim of the assessee isnot correct and not admissible in view of the provisions of Section 57 (iii) of the Act". Aggrieved by the stand so taken by the Assessing Officer, assessee carried the matter in appeal before the CIT(A) but without any success. Learned Commissioner (Appeals) upheld, and in fact fortified, the stand of the Assessing Officer, and, while doing so, observed as follows: 6.3 I have considered all the facts relating to disallowance of interest as discussed by the AO in the assessment order as well as the argument taken by the ld. AR in his written submission. The only argument of the ld. AR against the disallowance of interest claimed by the appellant out of interest income on FDRs by not encashing the FDRs and taking loan against the FDRs for giving gift to her son is that she has shown higher income from FDR because if she had encashed FDRs for giving the gift, no interest income could have been accrued to the assessee (appellant) and hence, in view of the ld. AR, if any expenditure is incurred in paying interest on such loan, it....
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....om FDRs. Therefore, I confirm the decision of the AO for disallowing the* interest of Rs. 4,36,705/* u/s.57(iii) against the interest income on FDRs and hence, the addition of Rs. 4,36,705/* is confirmed and accordingly, ground no.3 is dismissed. 12. The assessee is not satisfied with the order of the learned Commissioner (Appeals) as well, and is in further appeal before us. 13. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case in the light of the applicable legal position. 14. Let us first take a look at the undisputed factual position, in the backdrop in which the assessee resorted to borrowings against the security of fixed deposits in question, which is set out in assessee's submissions dated 19th December 2012, as reproduced at pages 7 and 8 of learned CIT(A)'s order. The relevant part of these submissions is as follows: That the assessee has taken the loan from ICICI Bank of Rs. 75,00,000/- -which was taken on security of FDRs lying with the bank and amount was gifted to Shri Ashu Agarwal. As regard disallowance of interest pai....
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....ose of making or earning such income". It is thus clear that as long as an expenditure is incurred wholly or exclusively for the purpose earning an income, such an expenditure constitutes an admissible deduction in computation of the income. 16. The question that we really need to adjudicate on is, therefore, whether or not income paid on interest against the fixed deposits can be said to have been incurred "wholly and exclusively" for the purpose of earning interest income from fixed deposits. 17. The legal connotations of expression "wholly and exclusively" came up for consideration before a coordinate bench of this Tribunal, though in the context of deductions from business income, and the coordinate bench, extensively reproducing from binding judicial precedents, observed as follows in the case of Ajay Singh Deol v. JCIT [(91 ITD 196) 2004]: 8. We find guidance from a passage from the judgment of House of Lords in the case of Atherton v. British Insulated & Helsbey Cables Ltd. [1925] 10 Tax Cases 155 (HL), referred to with approval by the Hon'ble Supreme Court in the case of CIT v. Chandulal Keshavlal & Co. [1960] 38....
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....responds to s. 10(2)(xv) of the Act. An attempt was made in the IT Bill of 1961 to lay down the "necessity" of the expenditure as a condition for claiming deduction under s. 37. Sec. 37(1) in the Bill read "any expenditure...... laid out or expended wholly, necessarily and exclusively for the purposes of the business or profession shall be allowed...." The introduction of the word "necessarily" in the above section resulted in public protest. Consequently, when s. 37 was finally enacted into law, the word "necessarily" came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under s. 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law." 18. It is thus clear that as long as the expense is incurred wholly and exclusively for the purpose of earning an income, even if it is not necessarily for earning that income, it will still be deductible in computation of income. What thus logically follows is that even in a situation in which proximate or immediate cause of an expenditure was an event unconnected to earning of the income, in the sense....