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SAB Electronic Devices Ltd.,B-7/2, Okhla Industrial Area, Phase II, New Delhi. Vs. DCIT, Circle-7(1), New Delhi.
September, 12th 2014
                DELHI BENCHES : D : NEW DELHI


                       ITA No.2009/Del/2013
                     Assessment Year : 2008-09

SAB Electronic Devices Ltd.,        Vs.   DCIT,
B-7/2, Okhla Industrial Area,             Circle-7(1),
Phase II,                                 New Delhi.
New Delhi.


     (Appellant)                              (Respondent)

              Assessee By       :    Shri P.N. Mehta, CA
              Department By     :    Dr. B.R.R. Kumar, Sr.DR



       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 `

                                                     ITA No.2009/Del/2013

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
                                                     ITA No.2009/Del/2013

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

                                                           ITA No.2009/Del/2013

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.

                 Sd/-                                        Sd/-
       [A.T. VARKEY]                                  [R.S. SYAL]
     JUDICIAL MEMBER                              ACCOUNTANT MEMBER

Dated, 11th September, 2014.


Copy forwarded to:

     1.   Appellant
     2.   Respondent
     3.   CIT
     4.   CIT (A)
     5.   DR, ITAT

                                                    AR, ITAT, NEW DELHI.

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