Principal Commissioner Of Income Tax - 17 v. Suryakant H. Gandhi

1 / 3 13-ITXA-193-17.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.193 OF 2017 Principal Commissioner of Income Tax - 17.... Appellant versus Suryakant H. Gandhi ….... ... Respondent •Mr.Suresh Kumar, Advocate for Appellant. CORAM : AKIL KURESHI &SARANG V. KOTWAL, JJ.DATE: 15[th] APRIL, 2019. P.C. : 1. This Appeal is filed by the revenue to challenge the judgment of Income Tax Appellate Tribunal. Following questionis presented for our consideration; “Whether, on the facts and in the circumstances of thecase and in law the Hon'ble Tribunal was justified indeleting the disallowance of interest expense ofRs.1,50,21,941/- made by the A.O.?” 2. Brief facts are that the assessee had entered into an 2 / 3 13-ITXA-193-17.odtagreement with the cooperative society for development of landfor the purpose of which the assessee had deposited certainamounts with MHADA. Somehow, the project did notmaterialize. The assessee had received a total sum of Rs.1.47cores and Rs.60 lakhs, which is shown by way of interest andcompensation respectively. Both the receipts were shown asbusiness income. The assessee had also interest expenditure ofRs.1.50 crores in the same year. The Assessing Officer rejectedthe claim of interest expenditure. CIT (Appeal) and Tribunalconcurrently held that the assessee was in the business and theinterest was paid wholly and exclusively for earning income. TheTribunal in the impugned judgment held and observed as under; “5.3. Before us, the DR supported the order of the AO. Wefind that the assessee had received certain amountunder the head interest and compensation, that hehad paid interest during the year underconsideration, that the AO disallowed the claim madeby the assessee, that he was of the opinion thatexpenditure was not incurred wholly and exclusivelyfor earning the income. We find that the FAA hadfind that the assessee had received certain amountunder the head interest and compensation, that hehad paid interest during the year underconsideration, that the AO disallowed the claim madeby the assessee, that he was of the opinion thatexpenditure was not incurred wholly and exclusivelyfor earning the income. We find that the FAA had 3 / 3 13-ITXA-193-17.odt given a categorical finding that there was a directrelation between interest received by the assessee andthe interest paid by him, that because of the disputethe assessee was following a particular method ofaccounting. In these circumstances we are of theopinion that the FAA had rightly held that thetransaction related with interest receipt/paymentwere directly related to the business activity of theassess. Confirming his order, we decide Ground No.1against the AO.” 3. The entire issue is thus based on appreciation ofmaterials on record. No question of law arises. Income TaxAppeal is dismissed. (SARANG V. KOTWAL, J.) (AKIL KURESHI, J.)