ACIT Vs Ashish Kumar Chaurasia (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, dismissed the Revenue’s appeals for Assessment Years 2017-18 and 2018-19 and upheld the orders of the Commissioner of Income Tax (Appeals) [CIT(A)] allowing deduction of interest expenditure claimed by the assessee as business expenditure. The dispute arose when the Assessing Officer disallowed interest expenditure of ₹1,86,75,473 incurred on an unsecured loan of ₹25 crore obtained from M/s Siddhivinayak International. The assessee had initially claimed the deduction under Section 57 against income from other sources and later, during assessment proceedings, submitted a revised computation contending that the loan had been utilized for business purposes and that the interest should be allowed as a business expenditure.
The Assessing Officer rejected the revised claim on the ground that no revised return had been filed and relied on the Supreme Court decision in Goetze (India) Ltd. v. CIT. The Assessing Officer also held that the nexus between the interest expenditure and the interest income declared under the head “Income from Other Sources” had not been established. Consequently, the interest deduction was disallowed and added back to the assessee’s income.
On appeal, the CIT(A) examined the facts and found that the loan had been utilized for the business of the assessee’s proprietorship concern. The appellate authority observed that the Assessing Officer had not disputed the genuineness of the loan or its utilization for business purposes. The CIT(A) further noted that the assessee had not made a fresh claim for deduction but had merely sought to change the head under which the deduction was claimed, from “Income from Other Sources” to “Business Income.” Holding that the reliance on Goetze (India) Ltd. was misplaced in the facts of the case, the CIT(A) deleted the disallowance and allowed the deduction of the interest expenditure.
