TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 793
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....s submitted that the facts of the other two years are mutatis mutandis similar. Briefly stated, the facts of the case are that the assessee is a company engaged in the business of providing housing loan. A deduction amounting to Rs. 8,14,50,000/- was claimed u/s 36(1)(viii) of the Income-tax Act, 1961 (hereinafter also called `the Act') with the computation as under:- Chart-A Computation of Rebate Allowable u/s 36(1)(viii) of the Income Tax Act, 1961. 1. Business income before deduction u/s 36(1)(viii) of the Income Tax Act 59,68,03,660 Ratio of interest on Long Term Housing Loans to Total interest of Housing Loans 140,69,40,560 : 205,70,94,576 68.39: 100 2. Profit from Long Term Housing Loans Therefore, 68.39% of bus....
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....55,679 (ii) Personnel Cost 5,60,16,398 (iii) Establishment Expenses 3,09,35,165 Total 154,36,07,242 2. Income (i) Interest Income 217,32,21,686 (ii) Fees & Other Charges 6,54,88,135 ----------------- Total 223,87,09,821 ------------------ 3. Ratio of Expenses (Rs.1543607242) to Gross Receipts(Rs.2238709821) 68.95% 3. The AO noticed that the calculation of item at Sl. no. (iv) under Chart-B, was started by the assessee with 'Income from other sources' at Rs. 10,41,98,731/- and, thereafter, the assessee deducted expenses amounting to Rs. 7,18,45,025/- @ 68.59%, which was determined as per Chart-C. This interest income of Rs. 10.41 c....
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....6 crore from 'Interest on investment', being 'Income from other sources', was not permissible. 4. The AO re-prepared Chart-C and Chart-B as under:- Chart-B 1 Business income after making adjustments 66,21,03,014 2 Less: (i) Depreciation on Fixed Assets as per Income Tax Rules 48,89,252 (ii) Recovery of unrealized interest 70,35,453 (iii) Reversal of provisions for doubtful debts & advances 2,07,74,884 (iii) Short term Capital Gains 2,46,059 (iv) Income from Other Sources 1041,98,731 (a) Interest on investments Less: Expenses @ 3.82% 39,80,392 ....
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....above allowable as deduction u/s 36(1)(viii) of the Income Tax Act 6,86,77,443 4. Amount transferred to Special Reserve created u/s 36(1)(viii) of the Income-tax Act. 8,14,50,000 5. Amount allowed as deduction u/s 36(1)(viii) of the Income-tax Act. 6,86,77,443 6. That is how the amount of deduction u/s 36(1)(viii) was reduced from Rs. 814,50,000/- to Rs. 6,86,77,443/-, resulting into disallowance to the tune of Rs. 1,27,72,557/-. The ld. CIT(A) got convinced with the assessee's submissions and restored the deduction u/s 36(1)(viii) to the amount as claimed by the assessee. The Revenue is aggrieved with such direction of the ld. first appellate authority. 7. We have heard the rival submissions and perused the relevant materi....
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....413 (Bom) has held that the finance charges and interest paid on loans obtained by the assessee for making investment in shares is deductible u/s 57(iii) in computing `Income from other sources'. In view of the above legal position, it is apparent that the amount of interest expenditure can be allowed as deduction u/s 57 of the Act provided the investments are made from interest bearing loans. 9. Coming back to the factual matrix of the case, we note that there is no discussion in the assessment or the impugned order as to the nexus of investment in such bonds with the interest bearing or interest free bonds. The AO has gone with the figures of the current year to hold that interest bearing advances are more than the interest bearing loans....