K.S.JHAVERI, J. - (1.) BY way of this appeal, the appellantassessee has challenged the order dated 27.01.2003 passed in ITA No.1953/Ahd/1996 by the Income Tax Appellate Tribunal, Ahmedabad (for short "the ITAT").
(2.) THE facts in brief are that the assessee is one of the Directors in Vadilal Industries Limited and Vadilal Chemical Limited. The assessee filed a return of income on 31.08.1993 for the assessment year 199394, showing a loss of Rs.4,76,271/. Thereafter, on 16.09.1993 a revised return of income was filed in which the total income declared was 48,799/. The return of income was processed under Section 143(1)(a) of the Income Tax Act. On 19th October, 1994, the Assessing Officer passed an order under Section 143(3) of the Income Tax Act and determined the total income of the assessee at Rs.6,19,635/. 2.1. Against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Ahmedabad. The CIT(A) partly allowed the said appeal. Being aggrieved by the order of the CIT(A) the assessee filed an appeal before the Income Tax Appellate Tribunal. The Tribunal vide order dated 27.01.2003 partly allowed the appeal of the assessee. Hence, this appeal is filed at the instance of assessee.
(3.) WHILE admitting this appeal on 11.08.2003, the Court had formulated the following question of law: "Whether, on the facts and circumstances of the case, the interest of Rs.3,81,924/was rightly disallowed under Section 57(iii) of the Income Tax Act, 1961 even when the interest on the same borrowing had been allowed as a deduction in the immediately preceding assessment year - Mr. Shah, learned counsel for the appellant has taken us to the order of the Assessing Officer, Commissioner of Income Tax as well as the order of the Tribunal and submitted that the Tribunal has committed error in upholding the disallowance of interest of Rs.3,81,924/from the total interest of Rs.5,49,006/paid by the asseessee. He further submitted that the Tribunal has not properly appreciated the fact that the appellant was maintaining one common account in which all his income was deposited and from which withdrawal for all the expenditure was done. 4.1. He has drawn our attention to the provisions of Section 57(iii) of the Income Tax Act, which reads as under: "(iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income" 4.2. In support of his contention, he relied upon the decision of the Karnataka High Court in the case of Commissioner of Income Tax Vs. Sridev Enterprises, 1991 192 ITR 165. 4.3. He also relied upon the decision of the Apex Court in the case of Commissioner of Income Tax Vs. Excel Industries Ltd., 2013 358 ITR 295. ;