Kalpana Bharatbhai Bodiwala, ... vs Assessee

सुनवाई क तार ख/Date o f Hearing : 21/05/2015 घोषणा क तार ख /Date o f Prono unceme nt: 19/06/2015

आदेश /O R D E R

PER S.S. GODARA, JUDICIAL MEMBER

This assessee's appeal for A.Y.2008-09, arises from order of the CIT(A)-XVI, Ahmedabad dated 23.11.2011, passed in case no.CIT(A)-XVI/ITO/Wd-10(2)/639/10-11, in proceedings under section 143(3) of the Income Tax Act, 1961, in short 'the Act'.

2. Case called twice. Nobody has come present at the assessee's behest. The registry has already served the assessee an RPAD notice issued on 17.4.2015. We proceed ex-parte ITA No.240/Ahd/2012 Kalpana Bharatbhai Bodiwala For A.Y. 2008-09 -2-

against her in these circumstances and proceed to decide the appeal on merit.

3. The assessee-individual filed her return on 30.11.2009 admitting income of Rs.5,22,852/-. The Assessing Officer took up scrutiny. The assessee had sought set off of bank overdraft interest to the tune of Rs.1,87,444/- against fixed deposits with the bank and similar interest recognized as income from 'other' sources. She stated to have received fixed deposits interest from the corporation bank of Rs.3,38,267/- and paid overdraft limit interest on fixed deposits @10 of Rs.1,87,444/-. She would further claim to have been enjoying FD overdraft limit of Rs.18,63,000/- from the bank for the last ten years and advanced the same @ 12% as disclosed in the accounts. The Assessing Officer in assessment order dated 8.9.2011 observed that the assessee's interest was not from any business activity but only from bank deposits and other creditors assessed as income from 'other' sources. He held that though section 57(iii) of the Act permitted deduction of expenditure in earning such income u/s.56, however, the same had to be wholly and inclusively incurred for the purpose of making or earning the very income. He quoted assessee's failure in showing nexus of the abovesaid interest income and the one sought to be set off and made the impugned disallowance.

ITA No.240/Ahd/2012 Kalpana Bharatbhai Bodiwala For A.Y. 2008-09 -3-

4. The CIT(A) has agreed with the Assessing Officer's findings as under:

"2.0 The only ground of appeal is regarding the disallowance of interest of Rs. 1,52,782/-paid on OD account. The Assessing Officer had discussed this issue in para-3 of the assessment order. The Assessing Officer had noticed that the assessee had received interest of Rs. 5,23,012/- out of which bank OD interest of Rs. 1,52,782/- was reduced. As per facts of the case, the assesses was not having any business or profession and therefore, the assessee was required by the Assessing Officer to co-relate the interest borrowing with the income offered with nexus. However, the assessee had not submitted any justification or proved the nexus of borrowing with income offered and therefore the claim of interest of Rs.1,52,782/- was disallowed and added to income. As per information provided by the Ld. Counsel, the interest of Rs.1,46,070/- was received from M/s K.Bodiwala & Co., the interest of Rs.70,560/- was received from M/s shaiman Chemicals Pvt. Ltd., the interest of Rs.2,85,252/- was received from Corporation Bank, the interest of Rs.4,976/- was received from Punjab National Bank and the interest of Rs.15,562/- was received from Post Office, and interest of Rs.1,52,782/- was paid to Corporation Bank. The interest on FDRs was received from the Corporation Bank therefore, the interest payment cannot be linked to the FDR interest. Apparently, the assessee was not having any business or profession and thereby, the appellant was required to establish that the interest paid to bank was incurred for earning the other interest income because the interest was not incurred for the interest earned from FDRs. In absence thereof, the Assessing Officer was justified in disallowing the interest expenses of Rs. 1,52,782/- and the same is hereby confirmed. The decisions relied upon can be applied only when it is established that the Interest payment was made for earning the interest income and therefore, the appellant cannot derive support from the decisions relied upon by her Counsel. The ground of appeal is accordingly dismissed."

5. We have heard the Revenue and gone through the assessee's written submissions as well as the relevant findings. Both the lower authorities has disallowed the assessee's claim ITA No.240/Ahd/2012 Kalpana Bharatbhai Bodiwala For A.Y. 2008-09 -4-

of interest set off under section 57(iii) of the Act quoting her failure in proving nexus thereof with the interest income treated under the head 'other' sources. There is hardly any dispute that the very statutory provision allows an expenditure in earning income from other sources which is 'laid out or expended wholly and inclusively for the purpose of making or earning' such income. The CIT(A) findings have examined the assessee's interest receipts from each source. Neither the assessee's pleadings nor her written submissions in case record are able to prove any nexus between her interest income and the interest expenditure sought to be set off. In these circumstances, we hold that the assessee's impugned claim is not allowable. Her sole substantive ground accordingly fails.

6. The assessee's appeal is dismissed.

Order pronounced in the Court on this day, the 19th June,2015 at Ahmedabad.

Sd/- Sd/- (G.D. AGRAWAL) (S.S. GODARA) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 19/06/2015 Prabhat Kr. Kesarwani, Sr. P.S. आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad ITA No.240/Ahd/2012 Kalpana Bharatbhai Bodiwala For A.Y. 2008-09 -5-

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad