2013 (7) TMI 814

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....ngh ORDER 1. We have heard Shri Shambhu Chopra, learned counsel appearing for the department. Shri S.D. Singh appears for the respondent-assessee. 2. This Income Tax Appeal filed under Section 260-A of the Income Tax Act arises out of judgment and order of Income Tax Appellate Tribunal, Lucknow Bench dated 19.5.2009 in respect of assessment year 2005-06. 3. The department has preferred....

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.... in relation to income, which is not includible in total income shall not be allowed as a deduction under the Income Tax Act, 1961, and since dividend income is exempt from tax, any interest paid for the purpose of earning such dividend income would not be allowable as a deduction. 2. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was justified in law in properl....

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....he ground for disallowing the interest was not supported by facts on record. He explained that after 31.3.2003 out of total investment in shares at Rs.1,32,06,598/-, a sum of Rs.1,30,12,000/- represented the shares of Kailash Auto Builders Pvt. Ltd in settlement of trade debts of M/s Commercial Body Builders, hence no funds were given in the financial year 2002-2003 for acquisition of shares in se....

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....y was used by the assessee in share business. We are, therefore, of the considered view that payment of interest on unsecured loans has no nexus with acquisition of shares in earlier years. 11. On an identical issue in the case of CIT vs. Prem Heavy Engineering Works P. Ltd (supra) the Hon'ble jurisdictional High Court confirmed the finding of the Tribunal observing as under:- "Held, that th....