Ankur Chandulal Shah Vs. The Asst. Commissioner of Income Tax, Circle -19(1), Mumbai

Parties Involved

Facts Summary

The assessee, Ankur Chandulal Shah, is an individual and a partner in a partnership firm M/s Creative International. He filed his return of income for the Assessment Year 2017-18 declaring a total income of ₹1,13,74,120. His case was selected for scrutiny due to a large deduction claimed under section 57. The assessee claimed a deduction of ₹1,06,32,156 as interest expenditure under section 57(iii) of the Income-tax Act, 1961. However, due to the assessee's failure to respond to statutory notices, the Assessing Officer disallowed the deduction and made an addition of ₹1,06,32,156. The assessee argued that he had received interest income from M/s Ariha Diamonds Jewellery Pvt. Ltd., in which he was a Director and shareholder, and had advanced loans to the company funded by loans and advances from family members and friends, on which he paid interest aggregating to ₹1,06,30,156. The assessee offered the net interest income of ₹70,51,426 under the head “Income from Other Sources”.…

Legal Issues

• 1. Whether the interest expenditure of ₹1,06,32,156 claimed under section 57(iii) is allowable.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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