Disallowance of deductions claimed by the assessee u/s 57(III) of the Income Tax Act

This Income Tax Appellate Tribunal case concerns an appeal against the disallowance of deductions amounting to Rs. 40,53,426, claimed by the assessee under Section 57(iii) of the Income Tax Act. The deductions were related to interest expenses claimed against interest income. The Assessing Officer selected the case for limited scrutiny due to the large deduction claimed, and the disallowance was subsequently confirmed by the Commissioner of Income Tax (Appeals).

IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH ‘B’, CHANDIGARH

BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
AND SHRI R.L. NEGI, JUDICIAL MEMBER

ITA No.21/Chd/2019
Assessment Year : 2014-15

Sh.Ravinandan Kumar,
#606/2916, C/o M/s Rahul Sales,
Krishna Nagar, Ferozpur Road,
Ludhiana.
PAN NO: AGQPK5052L
Appellant

Vs.

The D.C.I.T. ,
Circle – 7, Ludhiana.
Respondent

Assessee by : Shri Parikshit Aggarwal, CA
Revenue by : Shri Ashok Khanna, Addl.CIT

Date of Hearing : 07.06.2021
Date of Pronouncement: 07 .06.2021
(Hearing through webex)

Order 

Per Annapurna Gupta, Accountant Member:

The above appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-3 [in short the ‘Ld.CIT(A)], Ludhiana dated 14.11.2018 relating to assessment year 2014-15, passed  u/s 250(6)) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’.

2. The assessee has raised the following grounds:

“1. That the Learned Commissioner of Income Tax Appeals)-3, Ludhiana has erred the confirming the addition of Rs.40,53,426/- made by the Learned Assessing Officer on account of disallowing the deductions claimed by the assessee u/s 57(III) OF THE Income Tax Act, 1961 AT Rs.40,53,426/- without considering the facts of the case, without giving any opportunity for hearing to the appellant and without considering the submissions filed by the appellant during the course of appellate proceedings as per as in Assessment Proceedings. Therefore, addition of Rs.40,53,426/- made by the Learned Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals)-3, Ludhiana is illegal, uncalled for and needs to be deleted.

3. That the appellant craves to leave or to amend the Ground of appeals before or at the time of hearing.

3. As is evident from the grounds of appeal raised before us, the solitary issue in the present appeal relates to disallowance of deduction claimed by the assessee u/s 57(iii) of the Act amounting to Rs.40,53,426/-. The impugned disallowance, as is emanating from the orders of the authorities below, relates to interest expenses incurred which were claimed against interest income earned by the assessee and returned under the head “income from other sources”. Taking us through the facts of the case, the Ld.Counsel for the assessee first drew our attention to the assessment order made on the assessee dated 21.12.2016 and pointed out that the case of the assessee was selected for limited scrutiny under CASS for one of the reason being large deduction claimed u/s 57 of the Act.

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