Shri Binoy Rajen Shah vs CIT(A), NFAC, Delhi

Parties Involved

Facts Summary

The assessee, Shri Binoy Rajen Shah, filed an appeal against the order dated 10/05/2023 by NFAC Delhi pertaining to Assessment Year 2016-17. The assessee had taken unsecured loans for introducing capital in the partnership firm and claimed interest expenditure against income from other sources. The Assessing Officer disallowed the interest expenditure under Section 14A of the Income Tax Act 1961. The assessee carried the matter before the Commissioner of Income Tax (Appeals) but without any success. The assessee contended that the remuneration received from M/s. Shah Traders has been taxed as profit and gains under the head Business & Profession and only the profit element has been claimed as exempt from tax whereas interest is paid on borrowed capital utilized as capital contribution in the partnership firm. The Tribunal found that the loans have been taken for a specific purpose, therefore, it is not correct to invoke the provisions of Section 14A r.w.r 8D. Moreover, the share of profit earned from the firm is received after payment of due taxes on the profit by the firm and is exempt in the hands of the partner to avoid double taxation.…

Legal Issues

• 1. Disallowance u/s 14A for Rs 23,77,284/-
• 2. Addition u/s 68 of Rs 53,377/-

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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