TaxTMI 
TaxTMI 
2022 (4) TMI 383
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.....O., of Rs. 31,28,907/- which finding of the CIT(A) are illegal, arbitrary and perverse and against well settled law and thus deserve to be set aside in the interest of justice. 4. That without prejudice to above, the appellant also disputes the quantum of addition as highly excessive. 5. That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal. 3. The only grievance of the assessee in this appeal relates to the sustenance of addition of Rs. 31,28,907/- made by the A.O. on account of interest paid or incurred on the loans taken, against the income earned from interest being income from other sources under the provisions of Section 57 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 4. Facts of the case in brief are that the assessee filed the return of income on 31/12/2016 declaring an income of Rs. 12,68,320/- which was processed under section 143(1) of the Act. Later on the case was selected for scrutiny. The A.O. asked the assessee to give documentary evidences in support of claim of deduction under section 57 of the Act amounting to Rs. 31,28,907/-. The A.O....
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....as claimed as deduction u/s. 57. You have not established any nexus between the borrowed money for making investment in giving unsecured loans to earn the interest income. No nexus has been established between the amounts of interest received and interest paid till today. Thirdly, from the perusal of the interest paid accounts of 15 persons it is found that no TDS has been deducted for giving the interest payment. Thus the genuineness of the expenditure could not be established till today. In view of the above you are asked for show cause that why deduction u/s. 57 amounting to Rs. 31,28,907/- should not be disallowed and added back to his income as it is not laid out or expended wholly and exclusively for the purpose of earning the income from other sources." 5. In response the assessee submitted as under: 1. That vide our reply dated 21.11.2018, it is stated that the assessee was not maintaining regular books of accounts since the assessee is not deriving any business income. Therefore, copies of ledger accounts for claiming expenditure on account of interest etc. u/s. 57 cannot be submitted. However, we have given the complete details of the interes....
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....ng account for F.Y. 2015-16 highlighting the interest payments as Annexure-1. 5. That the assessee has not made tax deduction at source (TDS) as the provisions of Section 194A(I) of the Act does not apply to individual. Further, the assessee also does not fall under the first proviso to Sec. 194A(I) of the Act as he has not made any sale etc. during the financial year immediately preceding for the F.Y. 2015-16. 5.1. The A.O. however, did not find merit in the submission of the assessee by observing in para 4.3 of the assessment order dt. 19/12/2018 as under: 4.3. The above reply of the assessee has been perused and is not found acceptable. At Point No. 1, the assessee has submitted that no ledger accounts for claiming the deduction u/s. 57 could be submitted as the assessee is not maintaining books of account. But for proving the nexus, the basic documents are the bank account statements through which the loans are given and even those have not been submitted by the assessee. Moreover when the assessee is claiming huge deduction u/s. 57 year after year the there must be some record on the basis of which the deduction is claimed. But the assessee has failed to s....
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....rties. The assessee may inform that all funds received and paid are being kept in a common bank account; it is not possible to match each and every repayment of the loan advanced by the assessee with the loans received by the assessee. However, there is a complete nexus between the interest paid qua to the interest income and the assessee is very much eligible for deduction u/s. 57 of the Act. The statement of the bank account of the assessee has already been submitted to your good self in our earlier replies in the matter. Therefore, funds from all these sources along with interest income on loans given by the assessee are although being kept in a common kitty and the out goes were also made from the same. However, only interest bearing funds were used to make loans and advances to the parties from whom the income in the form of interest was received" 5.4. However the A.O. did not find merit in the submissions of the assessee by observing as under: In the above mentioned point, the assessee himself has agreed that it is not possible to match repayment entries advanced by the assessee with loans received by the assessee. As such deduction u/s. 57 for such expenses are d....
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....oyal and others, Ludhiana Vs. The ACIT, Circle-2, Ludhiana. Copy of the said order was furnished which is placed on record. It was further stated that the assessee belongs to the family of the said assessee Shri Kamal Parkash Goyal who agitated the matter before the ITAT Bench 'A' Chandigarh. 9. In her rival submissions the Ld. Sr. DR strongly supported the orders of the authorities below and reiterated the observations made in there respective orders. 10. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that a similar issue having identical facts was a subject matter of the appeals by the Family members of the assessee in ITA No. 1354 to 1356/Chd/2019 for the A.Y. 2016-17 in the cases of Shri Kamal Parkash Goyal, Ludhiana and others Vs. The ACIT (supra) wherein vide order dt. 11/03/2021, the similar issue has been decided in favour of the assessee by observing in para 4 to 6 as under: 4. We have heard rival contentions and perused material available on record. The Ld. Counsel for the assessee has submitted that the assessee is in the activity of taking and giving loan ....