TaxTMI 
TaxTMI 
2020 (4) TMI 451
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....hese cases are similar, we take the facts of the case pertaining to the AY 2010-11 as a lead case. 3. The assessee engaged in the business of share in stock brokering, investment and trading in shares and securities, filed its return declaring Nil income. The AO completed the assessment u/s 143 (3) of the Act and made addition of Rs. 22,053/- on account of share trading stock and Rs. 1,88,64,396/- on account of disallowance u/s 57(iii) of the Act. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee partly allowed the appeal and restricted the deduction of interest expenditure to the extent of the interest income earned during the year. Aggrieved by the decision of the Ld. CIT (A) the assessee as well as the revenue filed the cross appeals. The revenue challenged the action of the Ld. CIT (A) in upholding the action of the AO in not allowing sum of Rs. 3,28,65,299/- which was restricted to 1,88,64,396/- being interest expenses against the income from other sources on the ground that the lending bank has discontinued providing for interest w.e.f. 1st April, 2003 and hence there is no liability/obligation of the appellant to....
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....e assessee's appeals for the AYs. 2010-11, 2011-12 and 2012-13 read as under:- "10. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also gone through the order of the Tribunal wherein para No.7 & 8 of page 8 & 12 for the A.Y.2008-09 and 2009-10, the tribunal have allowed assessee's claim of deduction of interest out of interest income. 11. The CIT(A) in his order in para no 8.2.1 on page no 9 observed that the facts of the case for the year under reference are similar to the facts involved in the order of the Tribunal for income-tax assessment years 2008-09 and 2009-10: however, he did not follow the order of Tribunal. In connection with interest to GTB (since merged with OBC), he referred to Schedule N, being notes on accounts (Note no 1 l(a)) and observed that the bank has stopped providing for interest with effect from 1/4/2003 and that since, the assessee are following mercantile system of accounting, he concluded that there is no liability/ obligation of interest payable to the bank. For similar reasons, he has not allowed interest payable to ICICI bank; for which the assessee have not provided for any interest in....
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....le to incomes under the head "income from other sources". 17. As per our considered view if the bank later on waives the interest to be paid to them by the assessee, the provisions of section 41(1) shall not be applicable but the provisions of section 59 of the Act which are similar to section 41(1) will be applicable. 18. Since the allowability of interest expenditure are with respect to the details of interest due with the above banks, whereas the one time settlement entered by the assessee for assessment year 2005-06 is with Centurion Bank; hence, the contention of learned DR is not applicable to the facts of the case. 19. Even though assessee has not paid the interest to the bank but as per provisions of Section 145(1), assessee has to compute its income under the head 'Profit and Gains of business and profession' or 'income from other sources' subject to provisions of sub-section (2) in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Thus, the interest expenditure need not be paid in as much as the income chargeable to tax under business income or income from other sources shall be computed in accordance with cash or mer....
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....est to various banks is concerned, we are of the opinion that if there is nexus between the interest received and interest to banks on borrowings, the same is to be allowed as deduction u/s 57(iii) of the Act. A plain reading of provisions of section 57(iii) of the Act reveals that any expenses which is not of capital in nature and is wholly and exclusively incurred or expended for the purpose of making or earning of such income has to be allowed against the income which is earned and assessable under the provisions of section 56 of the Act. We also find that the National Stock Exchange exercised lien on FDRs of Rs. 5 crores on 23.07.2002 (proceeds of FDRs Rs. 5,94,03,209/-)which was purchased on 19.07.2000 out of money borrowed from the Global Trust Bank and the assessee incurred interest on the said bank to the tune of Rs. 95.00 lakhs. Three other deposits out of interest bearing funds from Global Trust Bank were also given Rs. 2,00,000/- on 07.02.2000, Rs, 6,00,000/- on 21.09,2000 and Rs. 25,00,000/- on 18.10.2000 on which the assessee incurred interest of Rs. 6,27,000/-. Interest on bank guarantees invoked by the stock Exchange Rs. 3,15,00,000/- from Global Trust Bank , interes....
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....of issuing direction to the AO to allow credit of TDS which was a legitimate claim to which the assessee was legally entitled. 10. On the contrary, the Id. DR relied heavily on the order of Id. CIT(A). 11. We have carefully considered the submissions of the parties, perused the material placed before us including the orders of authorities below. We find that the assessee has not been allowed credit of Rs. 38,79,5847- being TDS at source on behalf of the assessee by NSE/Banks and the Id. CIT(A) has just dismissed the ground by directing the assessee to file rectification application u/s 154 of the Act which is not correct in our view and hence we are of the view that it would meet ends of justice if the AO is directed to allow the credit of TDS of Rs. 38,79,5847- after verifying the claim of the assessee after allowing reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 12. The issue raised in respect of depreciation amounting to Rs. 1,79,634/- raised in ground No.2 not allowing the depreciation to the assessee. The Id. CIT(A) also rejected the ground of the assessee on the ground that business has ceased and therefore no dep....