2023 (7) TMI 366

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...."the CIT(A)"] erred in not allowing expenses of Rs. 46,76,255/- incurred by the appellant during the course of its business operations. 1.2 On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in not considering that the said expenses were incurred wholly and exclusively for the activities to earn income as well as to maintain the appellant's establishment as corporate entity and to comply with its statutory obligations. 1.3 On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding an invalid assessment order, which was passed in gross violation of CBDT instructions issued in relation to scope of enquiry in cases under 'Limited Scrutiny'." 3. The assessee filed return ....

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....ary, maintenance and other expenses which had been disallowed by the appellant itself in the computation. 9. The Assessing Officer noted that the appellant had earned interest amounting to Rs. 1,03,23,788/- on FDRs against which the appellant had claimed expenditure of Rs. 46,76,255/- as under: S. No. Particulars Amount (Rs.)     Interest on Fixed Deposits   1,03,23,188/- Less:- Auditors Fees 2,81,000/-     Employees remunerations       5% of CEO and CFO salary 26,47,828/-     Salary of company Secretary 13,09,669/-     Legal and professional fees- ROC 44,890/-     Board Meeting expenses-CEO and CFO travel expenses 77,416/-     ....

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.... of Income tax act, the total income of the company is chargeable to tax under section 4 of the Act. The total income has to be computed in accordance with the provisions of the Act. Section 14 of the Act enumerates that for the purpose of computation, income of an assessee has to be classified under five heads: (A) Salaries. (B) Income from house property. (C) Profits and gains of business or profession. (D) Capital gains. (E) Income from other sources 16. The income of the assessee rightly falls under the head "Income from other sources". 17. Further, we have perused the provisions of Section 57 of the I.T. Act which reads as under: "Deductions. 57. The income chargeable under the head "Income from other sources" shall be ....

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....in the case of income of the nature referred to in clause (viii) of subsection (2) of section 56, a deduction of a sum equal to fifty per cent of such income and no deduction shall be allowed under any other clause of this section: [Provided that no deduction shall be allowed from the dividend income, or income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or income in respect of units from a specified company defined in the Explanation to clause (35) of section 10, other than deduction on account of interest expense, and in any previous year such deduction shall not exceed twenty per cent of the dividend income, or income in respect of such units, included in the total income for that year, without deduc....