2015 (12) TMI 1169

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....ent monies to a company, Purple Creation P. Ltd., at 12% p.a., during the year, earning interest at Rs. 23,82,523/-. The same were, however, financed by borrowed capital, on which interest stood incurred at Rs. 31,39,579/-. Besides, the borrowing being through agency of finance brokers, another sum of Rs. 1,33,954/- was incurred toward brokerage charges. Claim of these expenses against interest income, assessable u/s. 56 of the Act, resulted in a loss of Rs. 8,87,532/-; the assessee also earning some bank interest. It is the claim for deduction of this excess expenditure, which is u/s. 57(iii), which is the subject matter of dispute. The assessee claims that the nexus of the borrowed funds with that advanced to the lendee-company and, thus,....

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....rd is misplaced, with even the ld. Departmental Representative (DR) not raising any objection in the matter. So, however, the assessee's plea, made with reference to the decision by the apex court in Rajendra Prasad Moody (supra), is misconceived. Surely, where the quantum of receipt is a function of several variables and, thus, uncertain, the same cannot govern the extent to which the expenditure incurred is to be allowed, being incurred in its totality for the stated purpose, i.e., earning of income. There is also no doubt with regard to the expenditure claimed being incurred bona fide. The concurrence with the assessee's argument, however, stops here. The answer is simple. The monies are borrowed, incurring brokerage charges for the purp....