The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the Internet subscription expenses incurred for members of housing society are not eligible for deduction under Section 57 of Income Tax Act, 1961.
The assessee Adarsh Sahakari Ghar Bandhnari Mandali Ltd is a co-operative housing, filed its return of income for assessment year 2013-14 declaring nil income. The case was selected for scrutiny.
During assessment, the Assessing Officer held that noted that the assessee claimed expenses of internet subscription and Airtel subscription are not eligible for deduction under section 57 of the Act and made disallowance/ addition.
Aggrieved by the order assesee filed an appeal before the CIT(A), who dismissed the appeal of the assessee. Therefore, the assessee filed a second appeal before the tribunal.
Sapnesh R. Sheth, Counsel for the assessee submitted both the Internet Subscription expenses are allowable expenses as assessee is working for mutual association without any motive of earning. Interest income earned by the assessee is the only income, thus, such expenses are allowable expenses.
Vinod Kumar, Counsel for the revenue submitted that only those expenses which were incurred for earning interest income can be allowed under section 57 Income Tax Act. Therefore the Internet Subscription expenses are not allowable as deduction under section 57 Income Tax Act.
After considering the submissions of the both parties the single member bench of Pawan Singh, (Judicial Member ) observed that under Section 57 of Income Tax Act deduction is to be made in respect of expenditure incurred solely for the purpose earning such income, provided the expenditure is not capital expenditure or personal in nature.
Therefore, the bench dismissed the appeal filed by the assessee.
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