2023 (3) TMI 469

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....the judgment of the Hon'ble Supreme Court in the case of CIT. West v/s Rajendraprasad Moody, Calcutta 115 ITR 519(SC) is followed however erred in interpreting the same. 2. The Commissioner (Appeals) erred in confirming income of Rs.6,01,840/- in place of Rs. NIL income returned. 3. The Commissioner (Appeals) ought to have observed from the details on record that there is a huge potentiality of higher income. 4. The Commissioner (Appeals) ought to have followed ratio of Hon'ble Supreme Court in the case of CIT v/s Rajendraprasad Moody, Calcutta 115 ITR 519 (SC) Holding that "it is not necessary that any income should in fact have been earned as a result of the expenditure. What section 57(iii) requires is that the....

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....he details. The Assessing Officer made disallowance of Rs. 17,65,962/- which was claimed as interest expenses under Section 57(iii) of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee is partner in M/s. Sweetoo Apparels and for the year 2006-07 the sales of Sweetoo Apparels was Rs. 2,74,86,340/- and net profit was Rs. 8,45,848/-. The Ld. A.R. further submitted that there was a credit balance in assessee's capital account i.e. Rs. 32,23,553/-. Then first expansion took in 2007-08 where the firm purchase premises and in F.Y. 2007-08 sales rose to Rs. 6,41,61,350/- and net loss was Rs. 71,4,582.66/-. ....

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....s claimed based on the decision of Hon'ble Apex Court in case of CIT vs. Rajendra Prasad Moody, 115 ITR 519(SC). The Ld. A.R. further submitted that nothing in the language of Section 57(iii) to suggest that the purpose for which the expenditure is made should fructify into any benefit by way of return in the sake of income. The Ld. A.R. also relied upon the decision of Tribunal in assessee's own case in ITA No. 1066/Ahd/2017 and distinguished the same that any interest salary etc. owned by the partner from partnership firm is taxable income under the head profit and gains of business and there is no question of categorizing it under the head income from other sources. Thus, the Ld. A.R. submitted that even in the past years assessee had ea....