Mukesh Gupta Vs DCIT (Karnataka High Court)
This appeal under Section 260-A of the Income Tax Act, 1961 was filed by the assessee challenging a common order of the Income Tax Appellate Tribunal (ITAT) for Assessment Years (AYs) 2013-14, 2014-15, and 2015-16. The assessee, an individual and Director of Smile Electronics Limited, had filed returns for the relevant years, which were selected for scrutiny. The Assessing Officer treated a receipt of Rs. 66,00,000 from the company as salary, rejecting the assessee’s claim that it was professional or technical service fees. The Assessing Officer held that the assessee failed to furnish details of the nature of services rendered; therefore, the amount could not be considered income from business or profession. The officer also disallowed the assessee’s claim for deduction of interest expenditure of Rs. 45,26,956, holding that no nexus was established between the interest cost and any professional or business activity.
The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the Assessing Officer’s view, noting that the assessee had not produced evidence regarding the nature of the services claimed to have been rendered and had also failed to prove the nexus between the interest expenditure and the alleged business activity. The CIT(A) held that treating the amount as salary was correct, and the interest claim was rightly disallowed.
