The Tax PublishersITA No 02/Rpr/2018
2022 TaxPub(DT) 5178 (Raip-Trib)INCOME TAX ACT, 1961
Section 57(iii)
As assessee had raised interest bearing loans to the extent of certain sum from Dynasty wholly and exclusively for the purpose of earning interest income on the loans/deposits given to GDR Educational Society, therefore, his claim for deduction of the corresponding interest expenditure under section 57(iii) was in order and was wrongly disallowed by AO.
|
Income from other sources - Deduction under section 57(iii) - Interest on loan - Assessee raised loans wholly and exclusively for the purpose of earning interest income on the loans/deposits given to other party
Assessee against his interest income of Rs.10,75,877 claimed deduction under section 57 of Rs.29,72,185 towards interest paid on unsecured loans. It was the case of assessee that as the corresponding interest bearing funds were raised by him wholly and exclusively for the purpose of advancing interest bearing amounts, therefore, his claim for deduction under section 57(iii) was in order. However, the aforesaid claim of assessee did not find favour with AO, observing that assessee failed to establish that unsecured loans were raised for earning of interest income, AO disallowed his claim for deduction under section 57(iii). Assessee filed a 'chart' revealing utilization of the loans aggregating to Rs.3.39 crores (approx) raised from Dynasty Tradelink (P) Ltd. As claimed by assessee interest bearing funds raised from Dynasty Tradelink (P) Ltd. had been utilized for advancing of interest bearing loans/deposits to GDR Eductional Siciety and certain other parties. Held: It is a matter of fact borne from record that an amount of Rs.3,22,50,000 (out of the amount of Rs.3,39,15,000) was utilized wholly and exclusively by assessee for the purpose of advancing amounts on interest over the period, i.e., 22-2-2012 to 7-2-2013 to GDR Educational Society. Accordingly, an inextricable nexus between the interest bearing loans raised by assessee from M/s Dynasty Tradelink Pvt. Ltd. and interest bearing advances/deposits given to GDR Educational Society was established beyond any doubt. As assessee had raised interest bearing loans from M/s Dynasty Tradelink Pvt. Ltd. for the purpose of making or earning interest income from GDR Educational Society, therefore, interest expenditure so incurred clearly fell within the realm of the deduction contemplated under section 57(iii) and was wrongly disallowed by AO.
Relied:CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC) : 1978 TaxPub(DT) 1028 (SC) and CIT v. Pankaj Munjal Family Trust (2010) 326 ITR 286 (P&H) : 2010 TaxPub(DT) 137 (P&H-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, RAIPUR BENCH
 SUBSCRIBE FOR FULL CONTENT
|