SAB Electronic Devices Ltd.,B-7/2, Okhla Industrial Area, Phase II, New Delhi. Vs. DCIT, Circle-7(1), New Delhi.
September, 12th 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : D : NEW DELHI
BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM
Assessment Year : 2008-09
SAB Electronic Devices Ltd., Vs. DCIT,
B-7/2, Okhla Industrial Area, Circle-7(1),
Phase II, New Delhi.
PAN : AAACS3409E
Assessee By : Shri P.N. Mehta, CA
Department By : Dr. B.R.R. Kumar, Sr.DR
PER R.S. SYAL, AM:
This appeal by the assessee arises out of the order passed
by the CIT (A) on 04.02.2013 in relation to the assessment year
2. The only issue pressed before us is against the confirmation
of addition on account of disallowance of expenses of `
3. Briefly stated, the facts of the case are that the AO noticed
during the course of assessment proceedings that the assessee
was earlier manufacturing almonium electrolytic capacitors and
plastic film capacitors used in telephone industries. It was
noticed that the assessee closed its business in the earlier year
and during the year in question there was no business activity
except for earning of interest income from FDRs, dividend from
investment and profit on sale of mutual funds. The assessee
claimed deduction for a sum of ` 5,07,386/- towards various
expenses. Considering the fact that the business of the assessee
stood closed in the preceding year, the AO disallowed the said
claim of deduction. The ld. CIT(A) reduced the addition by `
50,000/-. That is how, the assessee is aggrieved against the
sustenance of addition at ` 4,57,386/-.
4. We have heard the rival submissions and perused the
relevant material on record. The computation/revised
computation of income of the assessee is available on pages 8-11
of the paper book. From the copy of audited annual accounts, it
can be seen that the assessee earned income of ` 20,24,418/-
which was credited to the Profit & Loss Account. A detail of such
income is available in Schedule-7 to the Annual accounts. From
such details, it can be seen that it comprises of Interest on FDRs,
interest on loan, dividend and profit on sale of investment. Such
income has been assessed under the head `Income from other
sources'. Even if the business of the assessee of manufacturing
almonium electrolytic capacitors and plastic film capacitors was
closed in the earlier year, the assessee still earned income under
the head `Income from other sources'. Section 57 of the Act deals
with the deductions which are to be allowed while computing
income under the head `Income from other sources'. It can be
seen that the AO did not allow any deduction at all despite the
fact that he assessed some income under the head `Income from
other sources', whereas the ld. CIT(A) allowed relief for a sum of `
50,000/- on ad hoc basis without considering the mandate of
section 57. It goes without saying that if any amount is
deductible u/s 57 against `Income from other sources', such
amount has to be allowed as deduction in computing the income
under this head notwithstanding that there is no income under
the head `Profits and gains of business or profession'. Under the
given circumstances, we are of the considered opinion that it
would be in the interest of justice if the impugned order on this
issue is set aside and the matter is restored to the file of the AO.
We order accordingly and direct him to allow such expenses
which can be so allowed within the prescription of this section 57
of the Act against the income under the head `Income from other
sources'. Needless to say, the assessee will be allowed a
reasonable opportunity of hearing in such fresh proceedings.
5. In the result, the appeal is allowed for statistical purposes.
The order pronounced in the open court on 11.09.2014.
[A.T. VARKEY] [R.S. SYAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 11th September, 2014.
Copy forwarded to:
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.