ITAT Mumbai: Section 263 Revision Quashed as AO Examined Section 57(iii) Interest Claim

Manju Rakesh Jain Vs PCIT (ITAT Mumbai)

The Income Tax Appellate Tribunal, Mumbai Bench “A”, comprising Shri Om Prakash Kant, Accountant Member, and Shri Sandeep Singh Karhail, Judicial Member, heard the assessee’s appeal in ITA No. 2280/MUM/2025 for Assessment Year 2020-21. The appeal challenged the revision order dated 19.03.2025 passed by the Principal Commissioner of Income-tax, Mumbai-20 under Section 263 of the Income-tax Act, 1961. The Tribunal pronounced its order on 31.07.2025, after hearing the matter on 30.07.2025.

The assessee had filed her return of income on 05.01.2021, declaring total income of ₹1,78,02,520, comprising income under the heads Salary, House Property, Capital Gains and Income from Other Sources. The return was selected for scrutiny, and the assessment was completed under Section 143(3) read with Section 144B on 08.09.2022. The Assessing Officer accepted the returned income in toto.

The dispute concerned the assessee’s claim of ₹1,69,18,439 under Section 57(iii) towards interest expenditure against income offered under the head “Income from Other Sources”. The PCIT subsequently invoked revisionary jurisdiction under Section 263 after examining the assessment record. According to the PCIT, the Assessing Officer had allowed the interest deduction without making the inquiry and verification that should have been undertaken. The PCIT noted that the assessee had obtained loans from Bajaj Housing Finance and an HDFC overdraft facility, secured against house property, and had advanced funds to M/s Sanyam Realtors Pvt. Ltd., a company in which the assessee’s husband was a director.