TaxTMI 
TaxTMI 
2025 (5) TMI 788
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....024. The impugned order was emanated from the order of the Ld.Assistant Commissioner of Income-tax, Panvel Circle, Panvel passed under section 143(3) read with section 147 of the Income-tax Act, 1961 (in short, 'the Act'), date of order 21/03/2023. 2. The assessee has taken the following grounds of appeal:- "1. That the Ld. CIT(A) erred in upholding the action of the Learned AO of initiating the re-assessment proceedings u/s 147/148 by rejecting all the prepositions taken by the appellant challenging the initiation of the proceedings. That on the facts and in the circumstances of the case, the re-assessment proceedings initiated and the consequential order passed are wrong, without jurisdiction and not in accordance with law and....
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....g the difference between the income on which TDS was deducted and claimed and the income offered by the assessee as interest. Finally, the assessment was completed under section 143(3) read with section 147 of the Act and the interest amount to Rs. 2,73,09,676/- was added to the total income of the assessee. The assessee claimed that the assessee received interest income of Rs. 3,10,93,442/- and interest paid to bank was Rs. 2,73,09,676/-, which was duly adjusted with the interest received and the net interest income of Rs. 2,17,37,496/- was offered for tax. So none of the income was concealed by the assessee in the return of income filed and only adjustment related to the business income in respect of interest payment and interest received....
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....re adjustment is related to the business and the interest paid to different banks is duly annexed in APB pages 73 to 96 and the said adjustment is also mentioned in the audit report. The Ld.AR prayed that the addition of the adjusted interest amount of Rs. 2,73,09,676/- is unjustified. The Ld.AR further submitted as below:- DISALLOWANCE U/S 57 OF Rs. 2,73,09,676/- MADE ON ACCOUNT OF INTEREST EXPENSES. 3.1 The Ld. AO erred in making a disallowance of Rs. 2,73,09,676/- under section 57 on account of interest expenditure by stating that the interest expense were not necessarily incurred in order to earn the interest income. 3.2 During the course of assessment proceedings, it was explained that the appellant has earne....
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....to the net interest income received on FDs and offered the same as income from other sources in the return filed u/s 139 which was also assessed as such in the regular assessment order passed u/s 143(3). From the above, it is evident that the interest expenses incurred were related to the corresponding interest income earned therefore the disallowance of interest expenditure u/s 57 made by the Ld. AO is wrong and uncalled for and ought to be deleted. 3.5 It is further submitted that the Learned AO proceeded on a very incorrect premises, on surmises and conjectures that the appellant has claimed any deduction u/s 57. The appellant has not claimed any expenditure under section 57 which fact is evident from the return form i.e. ITR-6 ....
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....and proper taxable income and to levy the tax in accordance with law. Such claims ought to have been allowed suomoto by the AO. 5. The Ld.DR filed a written submission, containing pages 1 to 128 where the Ld.DR placed that the interest adjusted by the assessee was duly unjustified and it should be offered for tax. The part of interest earned by the assessee should be offered in the total income, so the adjustment is not permitted. The Ld.DR relied on the order of the Hon'ble Supreme Court in the case of CIT vs Dr.V.P. Gopinathan ( 2001) 248 ITR 449 (SC) wherein it is held that interest on a loan taken against a fixed deposit cannot be set off against interest earned on that fixed deposit; there is no provision permitting such netting. Th....