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| The Tax Publishers2023 TaxPub(DT) 1114 (Del-Trib) INCOME TAX ACT, 1961
Section 57(iii)
Assessee had been taking loans from the banks and financial institutions and same were lent to various other companies for earning interest income and the claim for set-off of interest paid to banks/financial institutions was to be allowed against interest earned by the assessee under section 57.
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Income from other sources - Deduction under section 57(iii) - Assessee claimed for set-off of interest paid on loans taken against interest earned by assessee on loans advanced by her -
AO denied the claim for set off of interest paid by assessee to banks/financial institutions against the income earned by assessee from various companies on the ground that assessee had not expanded interest expenditure for earning interest income. CIT(A) sustained the stand of AO observing that from the loan statements, it could be noted that the loans were granted either for purchase of home or for development of the land. The purpose for which the loans were granted to assessee was related to real estate and it was not as if the loans were taken from banks for the purpose of granting further loans to other parties and earning interest thereon. Held: Loan statements clearly indicated that loans were granted by India Bulls Homes & Finance Ltd. and ICICI Bank against the property and not for purchase of any immovable property. Therefore, observation of CIT(A) that loan was obtained for purchase of real estate was erroneous and contrary to record. The principle accepted by Revenue for the earlier four assessment years and three subsequent assessment years to the assessment year under consideration was that assessee had been taking loans from the banks and financial institutions and same were lent to various other companies for earning interest income and the claim for set-off of interest paid to banks/financial institutions was allowed against interest earned by the assessee under section 57. Since AO accepted the principle consistency in earlier assessment years and also in subsequent assessment years, there was no justification for deviating from the said principle only for the assessment year under consideration. Therefore, assessee's claim for netting off of interest in terms of section 57(iii) was in order.
Relied:Bharat Sanchar Nigam Ltd. v. Union of India (2006) 282 ITR 273 (SC) : 2006 TaxPub(DT) 1454 (SC), Vodafone South Ltd. v. CIT (2015) 378 ITR 410 (Del-HC) : 2015 TaxPub(DT) 3807 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, DELHI E BENCH
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