Case Law Details
Adarsh Sahakari Ghar Bandhnari Mandali Ltd Vs ACIT (ITAT Surat)
The case involves Adarsh Sahakari Ghar Bandhnari Mandali Ltd, a co-operative housing society, which claimed expenses on internet subscription and Airtel subscription as deductions under Section 57 of the Income Tax Act for the assessment year 2013-14. The Assessing Officer disallowed the deductions, and the decision was upheld by the National Faceless Appeal Centre, Delhi (NFAC) or the Commissioner of Income Tax (Appeals) [CIT(A)]. The society appealed to the ITAT Surat.
The ITAT Surat considered the submissions made by the society, which argued that the expenses were incurred for the benefit of its members and should be allowed as deductions. However, the tribunal observed that Section 57 allows deductions only for expenses incurred solely for the purpose of earning the income and when there is a nexus between the expenses and the income. In this case, the tribunal found that such nexus was absent, and therefore, the expenses were not eligible for deduction.
Conclusion: The ITAT Surat dismissed the appeal of Adarsh Sahakari Ghar Bandhnari Mandali Ltd, upholding the disallowance of expenses on internet subscriptions and Airtel subscriptions under Section 57 of the Income Tax Act. The tribunal concluded that there was no merit in the society’s argument that the expenses were incurred for the benefit of its members, as there was no nexus between the expenses and the interest income earned by the society.
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