AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 293
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....n the facts and in the circumstances of the case, the learned CIT erred in setting aside the assessment order dated 13^th December 2017 passed by the DCIT, Circle 3(1)(2) u/s. 143(3) of the I.T. Act, directing the Assessing Officer to pass a fresh assessment order. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." A.Y. 2016-17 "1. On the facts and in the circumstances of the case, the order passed by the learned PCIT 3 Ahmedabad u/s. 263 of the I.T. Act is ab initio void being bad in law. 2. On the facts and in the circumstances of the case, the learned CIT erred in setting aside the assessment order dated 13^th December 2017 passed by the DCIT, Circle 3(1)(2) u/s. 143(3) of the I.T. Act, directing the Assessing Officer to pass a fresh assessment order. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 3. The brief facts of the case are that the assessee, Rajpath Club Ltd. is a Club and primarily involved in various ....
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....0% deduction out of income from other sources has been claimed by the assessee on consistent basis for many years. However, the PCIT was of the view that perusal of the nature of expenses claimed by the assessee reveals that none of the expenses applicable has been apparently incurred for the purpose of earning interest income. The PCIT was of the view that the Assessing Officer had allowed the aforesaid expenses against "income from other sources" without verifying the nature of expenses and without verifying the nexus of these expenses with the earning of interest income by the assessee. The PCIT further observed that this issue has also been decided by the Hon'ble High Court of Gujarat in assessee's own case for A.Y. 1975-76 and 1976-77 (217 ITR 379 (Guj.)) wherein it has been held that no amount of expenses is allowable unless they are incurred wholly and exclusively for the purpose of earning such interest income. Accordingly, the PCIT set-aside the assessment order as being erroneous and prejudicial to the interest of Revenue with the following observation:- "...It is clear from a plain reading of above provision that in order to get deduction, the expenditure should....
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....see at any time during the previous year, it was held that expenditure incurred in proxy war should not be deducted as business expenditure. It may be pertinent to mention the distinction in the language used by the Legislature in sections 37(1) of the Act and 57(iii) of the Act. Section 37 provides for deduction of expenditure incurred wholly and exclusively "for the purpose of business" whereas section 57(iii) provides for deduction only of expenditure incurred wholly and exclusively "for the purpose of making or earning such income". "Such income" refers to "income from other sources". The expression "for the purpose of business" is narrower than the expression "for the purpose of making or earning such income". In order that an expenditure may be admissible under section 57(iii) it is necessary that the primary motive of incurring it is directly to earn income falling under the head "income from other sources". That is not so under section 37 which allows deduction of expenditure "incurred wholly and exclusively for the purposes of the business". Under section 57(iii), deduction will not be allowed if the expenditure is not incurred for the purpose of earning income fa....
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.... this issue has been considered by the Ld. Assessing Officer and the expenses so claimed by the assessee have been allowed. Accordingly, the argument of the assessee was that assessee has been consistently following this practice of claiming 10% deduction as expenditure against income from other sources under Section 57(iii) of the Act and Department has also been consistently allowing the same after carrying out due verification during the course of assessment proceedings. Further, the assessee submitted that identical issue was decided in the case of Sports Club Ltd. by Hon'ble ITAT Ahmedabad in A.Y. 1966-67 to 1969-70 and in A.Y. 2010-11 as well. Copy of both the orders were also submitted before Ld. PCIT for his perusal. Accordingly, from the above facts, it is evident that the order passed by Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. 7. In response, Ld. D.R. submitted that it is a well settled principle of law that any expenditure can be allowed under Section 57(iii) of the Act only if it is demonstrated by the assessee that such expenditure has been incurred for the purpose of earning interest income. In the instant facts, the L....
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....63 proceedings. 10. It would be useful to reproduce the relevant extracts of the ruling for ready reference:- "7. We have heard the rival contentions and perused the material available on record. In this appeal Revenue has raised two grounds against the order of ld. CIT(A) deleting the addition of Rs. 1,31,17,183/- made on account of guest fees and hire charges and the other ground against deletion of Rs. 6,10,847/- which was made on account of deduction claimed from income from other sources u/s 57(iii) of the Act. Further going through the decision of the Co-ordinate Bench in ITA No.1467/Ahd/2012 for AY 2009-10 & ITA Nos. 2121 & 2122/Ahd/1972-73 for Asst.1966-67 & 1967-68 in assessee's own case, we find that similar issues came up before the Co-ordinate Bench. We will take up each ground separately. 8. Ground no.1 reads as under - 1) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 1,31,17,183/- made on account of Guest fees, hire of rooms and hire charges in respect of club properties. The addition of Rs. 1,31,17,183/- was made on account of guest fees from members at ....
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....elating to A.Y. 2003-04 allowed the appeal of the appellant for deleting such additions. It is, therefore, respectfully following such decision, the addition so made is directed to be deleted. The appellant gets a relief of Rs. 52,95,900/-." 3. Since Id. CIT(A) has given relief to the assessee by placing reliance on the decision of Hon'ble ITAT in assessee's own case for the A.Y. 2003-04 and 2004-05, we feel no need to interfere with the order passed by Id. CIT(A) and the same is hereby upheld." 6.1. Before us, Revenue has not brought any contrary binding decision in its support nor has placed any material on record to demonstrate that the decisions of the Tribunal in assessee's own case for AY 2000-07 has been set aside by Hon'ble Jurisdictional High Court. We further find that reliance placed by the Revenue in the case of Sports Club of Gujarat Ltd. vs. CIT(supra) are on different facts and, therefore, the ratio of the judgement is not applicable to the facts of the present case. In view of the aforesaid facts, we find no reason to interfere with the order of the ld.CIT(A) and thus the ground of Revenue is dismissed. 6.2. Thus, appeal of the Rev....
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.... years on the issue which has not been agitated by either of the side. This is not the new issue to my mind, therefore, the principle of consistency required to be followed as has been held in various below mentioned case laws: (i) DCIT Vs. Sulabh International Social Service Organisation [350 ITR 189 (Patna)] (ii) CIT Vs. Ranganathar& Co. [316 ITR 252 (Mad)] (iii) Gopal Purohit Vs. Jt. CIT [334 ITR 308 (SC)] The facts of the case are also similar in this year and, therefore, respectfully following the decision of the department up to A. Y. 2009-10, the disallowance made by the A. O. is hereby deleted. The ground of appeal is, therefore, allowed. 13. We further observe that the Co-ordinate Bench in ITA Nos.2121 & 2122/Ahd/1972-73 for Asst. Years 1966-67 & 1967-68 has decided this issue for the first time and decided by observing as under :- "10. This brings us to consider the other aspect of the matter. viz. whether any deduction would be permissible in computing the income from interest. Section 57(iii) permits deduction of expenditure other than capital expenditure laid down or expended wholly and exclusively for the purpose o....