TaxTMI 
TaxTMI 
2019 (2) TMI 1190
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....by the learned Commissioner of Income Tax (Appeals) - 53, Mumbai. Following grounds of appeal are without prejudice to each other; 1) The Learned CIT (A) has erred in law & on facts in upholding disallowances made of deduction of expenses of Rs. 48,43,622/- claimed u/s 57(iii) under the head "Income from Other Sources" in the order of Income Tax passed by the Assessing Officer u/s. 143 (3) of the Income Tax Act, 1961 which is bad in law. 2) The Learned CIT (A) erred has erred in law & on facts in upholding imposition/ recomputation of interest under section 234B and 234D of the Act in the order of Income Tax passed by the Assessing Officer u/s. 143 (3) of the Income Tax Act, 1961 which is bad in law. 3) T....
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....ial available on record and submissions of the assessee submitted during the course of assessment proceedings, it was seen that the assessee has offered dividend income of Rs. 13,000/-, Bank Interest of Rs. 27,697/- and Director Sitting Fees of Rs. 10,000/- totaling to Rs. 50,697/-. Against the said income, the assessee has claimed Bank Charges of Rs. 71,184/- Interest on Car Loan of Rs. 27,06,661/-, Professional Fees of Rs. 6,31,160/-, Security Charges of Rs. 5,17,850/- and Travelling expenses of Rs. 9,87,951/- totaling to Rs. 49,14,806/- and shown net loss from other sources to the tune of Rs. 48,64,109/-. According to the A.O. as per section 57(iii), which reads as under: 57(iii) any other expenditure (not being in the nature....
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....expenses incurred and also since the nature of business of HDIL is of builders and developers, he is also compelled to keep security guards for which payments are made. It is stated that the provision of section 57(iii) nowhere mentions that expenses incurred wholly and exclusively for the purpose of making or earning the income should be less than or equal to income earned. It is contended that in the case of appellant, expenditure incurred of Rs. 48,43,622/- should not be looked from the angle of income received of Rs. 50,697/- as direct nexus was established between expenditure incurred and income received. It is claimed that the above mentioned expenses viz. interest on car loan, travelling expenses, professional fee and security charge....
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.... for the purpose of obtaining approvals and sanctions for conducting the business of HDIL and earning sitting fees as MD of HDIL. The appellant has not demonstrated that he had no option except to incur the aforesaid expenses like travelling expenses and security charges etc. in order to make possible the earning of the income by way of dividend/ bank interest/ sitting fees. As a matter of fact, the appellant himself admits that the user of the car on which interest is paid, travelling expenses and security charges were incurred "in order to conduct the business of HDIL" rather than to earn dividend income or bank interest etc. There is nothing to show that these expenses were laid out or expended wholly and exclusively for the pur....
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....pay tax under those various statutes is undoubtedly the personal liability of the assessee and any expenditure incurred for the proper computation of such liability would be clearly for the private purpose of the assessee. It would be in the nature of personal expense of the assessee which by the statutory injunction contained in s. 58(l)(a)(i) is clearly outside the pale of s. 57(iii)....... It is more a case of application of income after it is earned than of incurring expenditure for the application of making or earning the income". In view of the above discussion, I do not find any error or infirmity in the action of the A.O. in holding that the appellant had failed to establish the nexus between the expenses incurred and the i....
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....acceptable. By no stretch of imagination, it can be accepted that the assessee has incurred these expenditure for earning the director sitting fees. The authorities below are quite correct in arriving at a conclusion that there is no nexus between this expenditure incurred and the meagre income shown from other sources. However, we find that the alternative submissions of the assessee deserve consideration as the assessee has earned remuneration which is assessable as business income. These expenses can be considered u/s. 37(1) as business expenses after factual examination of the nexus with earning the business income. In this regard, the ld. Counsel of the assessee has agreed that the matter may be remitted to the file of the A.O. to exam....