TaxTMI 
TaxTMI 
2014 (4) TMI 966
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....y which the Ld CIT(A) has deleted the addition made by the Assessing Officer which he had made by disallowing the claim of assessee u/s 24 of the Income Tax Act, 1961 which was claimed by the assessee as expenditure of interest on borrowed capital. The revenue is also aggrieved with the contentions of Ld CIT(A) in I.T.A. Nos.3423 to 3426 with the finding of Ld CIT(A) by which he had held that in case of completed assessment, the addition cannot be made u/s 153A/153C without incriminating documents found at the time of search. In I.T.A. No.3425/Del/2011 the revenue has taken a further ground of appeal by which it is aggrieved by the action of Ld CIT(A) who had allowed the relief for an amount of Rs..21,375/- which the Assessing Officer had m....
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....y of leased deed submitted by the assessee company which means that the construction of the building on which rent has been earned has already been constructed. As such there is no nexus between the loan taken from M/s Silvassa Plast and the investment made and the construction of building. 4.3. The scope of deduction u/s 24 is much narrower as compared to deductions available u/s 36 in case of business income. While in case of business income, the only criteria that the expenses has to pass is that it should be expended for business purposes. It need not be connected with the income directly. For claim u/s 24 the claim of deduction of interest has to pass the strict test that principal amount borrowed should be expenses exclusively for ac....
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....ar, New Delhi for Rs..2,24,94,833/-. This addition to fixed assets has apparently been made out of the unsecured loan on account of inter-corporate deposits on which interest has been paid. The rental income during the year has been from this very property at Moti Nagar, Delhi. From these facts it is clear that there is a direct nexus between the amount borrowed on which interest has been paid and the acquisition/construction of the impugned let out property which has been acquired utilizing the borrowed capital funds. Therefore, in terms of section 24, of the IT Act the interest paid is allowable as a deduction. Accordingly, the addition of Rs..20,41,092/- made by the Assessing Officer is directed to be deleted." 5. The Ld CIT(A) in respe....
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....he year the appellant has paid total interest for Rs..66,80,286/- on the borrowing of funds, out of which proportionate sum of Rs..10,92269/- has been claimed as expenses against rental income and the remaining Rs..55,88,027/- is capitalized to the undergoing project of Distt. Centre, Wazirpur. Appellant has also submitted that opening balance of funds borrowed from M/s Silvassa Plast and M/s KLJ Resources Ltd. has been repaird by taking further borrowing from KLJ Polymers and chemicals Ltd. and others which has proportionately attributed against the building constructed at DLF, Moti Nagar, Delhi from which rental income has been earned. From these facts it is clear that there is a direct nexus between the amount borrowed on which interest ....
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....wable as deduction. Accordingly, the addition for Rs..7,56,107/- made by the Assessing Officer is directed to be deleted." Assessment year: 2008-09: "During the year the appellant has paid total interest for Rs..1,78,59,665/- on the borrowing of funds, out of which proportionate sum of Rs..7,93,741/- has been claimed as expenses against rental income and the remaining Rs..1,70,65,924/- is capitalized to the undergoing project of Distt. Centre, Wazirpur. Appellant has also submitted that opening balance of unpaid loans against the building constructed at DLF Moti Nagar, Delhi comes to Rs..58,91,305/- on the basis of calculatgion of initial borrowing for construction, less the returned amount over the last three years starting from A.Y. 200....
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.... therefore is an allowable expenditure. The appellant's claim has been examined from the ledger Account as well as the seized documents and the source of payment is found to be correct and accounted for. Additionally this amount is otherwise allowable u/s 28 of the Income Tax Act, 1961 as a business/trading loss in terms of the various decisions of Hon'ble Supreme Court. Accordingly, ground No.4 is allowed and for the addition of Rs..21,375/- is directed to be deleted." 6. At the time of hearing the Ld AR submitted Ld CIT(A) had deleted the additions on merits as well he held that additions were not legally tenable. The Ld CIT(A) had held that additions made by Assessing Officer were not tenable in view of the fact that no incriminatin....