Case Law Details
Sunil Bardia Vs ITO (ITAT Raipur)
ITAT Raipur held that interest income earned is not equal to the percentage of interest expenditure incurred cannot be reason for disqualifying expenditure within the provision of section 57(iii) of the Income Tax Act.
Facts- The assessee, is an individual, derives income under the head income from house property and profit and gains of business income from other sources and had filed a return of income for A.Y. 2017-18 declaring total income at Rs.4,78,990/-. Subsequently the case of the assessee was selected for scrutiny assessment through CASS to examine the issue of “large deduction claimed u/s. 57”.
From assessment records, the A.O had observed that the assessee had received interest income and also paid interest to different entities, for which, deduction was claimed u/s.57 of the Act. On verification of the submissions filed by the assessee, it was observed by the A.O that the assessee had received interest income of Rs.23,88,078/- and bank interest of Rs.60,978/- against which interest payment of Rs.26,41,032/- were claimed as expenditure u/s.57 of the Act and thereby showed loss of Rs.1,91,976/- under the head “income from other sources”.
AO in the cases of two parties from whom the assessee had received interest of 9%, 9.7% had disallowed difference by reducing the said rates from 16% and the disallowance was proposed for Rs.5,58,088/-. CIT(A) confirmed the said disallowance. Being aggrieved, the present appeal is filed.
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