2021 (4) TMI 812

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The facts relating to the case are stated in brief. The assessee is engaged in share trading activity and he has reported turnover of Rs. 6.63 crores. The assessee filed his return of income declaring a total income of Rs. 16,88,310/-, which consisted of income from salary, business, long term capital gains and other sources. The A.O. noticed that the assessee has declared an income of Rs. 13.65 lakhs under the head "Income from other Sources" after claiming following expenses:- a) NSEL loss set off - Rs. 6,61,216/- b) Interest expenditure on loss taken against - Rs. 1,59,969/- The A.O. was of the view that both the above expenses are not allowable as deduction and accordingly disallowed them. The Ld. CIT(A) also confirmed the same....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s return of income and further claimed it as deduction against "interest income" declared under the head "Income from other sources". It was so claimed on the reasoning that the investment made in NSEL is treated as "deposits" under the Maharashtra Protection of Interest of Depositors (in financial establishments) Act, 1999.The A.O. disallowed the claim by observing that there is no provision for the deduction of bad debts while computing income under the head "Income from other Sources" u/s 57 of the Income-tax Act,1961 ['the Act' for short]. 5. Before Ld. CIT(A), the assessee admitted that it has made the claim wrongly under the head "Income from other Sources". It was submitted that the above said loss is allowable as deduction ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ely 2014-15, 2015-16 & 2016-17. It was submitted by the assessee that the claim made in assessment years 2014-15 & 2015- 16 has been allowed. In this year, the AO disallowed the claim by observing that there is no provision u/s 57 to allow such kind of deduction. Before Ld CIT(A), the assessee has accepted that this claim is not allowable as deduction against interest income. Accordingly it was prayed that this amount be allowed as deduction against business income. The Ld CIT(A) has, however, taken the view that the claim of the assessee u/s 36(1)(vii) is not allowable as deduction, since the amount was not written off as bad during the year under consideration. 7. The transactions in commodities have been undertaken by the assessee in NS....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....is amount is deductible against the business income only. Accordingly, I set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim of Rs. 6.61 lakhs against the business income. 9. The next issue relates to disallowance of interest expenditure of Rs. 1,59,969/-. The assessee had taken loan against fixed deposits kept with Banks. The interest paid on that loan has been claimed as deduction against interest income declared under the head "Income from other sources". The assessee submitted before the AO that he had availed overdraft facility from State Bank of India in respect of his business/trading activity. The interest payable on overdraft facility fallen due and the assessee had availed loan against fixed....