2016 (1) TMI 227

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....e assessment year 2001-02, claiming following substantial question of law:- "Whether on the facts and in the circumstances of the case and in law, the order of ITAT is perverse as Tribunal has failed to adjudicate the issue in treating the interest on FDRs income under the head income from other sources and allowed the corresponding deduction of interest expenses under section 36(1)(iii) of the Income Tax Act, instead under section 57(iii) of the Act?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee declared total income of Rs. 1,10,860/- in its return of income filed on 30.10.2001 including income under the head 'income from business and profession' of R....

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....ICI and IDBI bank on funds utilized to make the impugned FDRs was allowable deductions under section 57(iii) of the Act against the interest income on such FDRs. The appeal was thus allowed. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. The Tribunal came to the conclusion that the income derived by the assessee was exigible to tax under the head 'income from other sources'. Once that was so, any expenses incurred by the assessee for earning the said income would fall under Section 57(iii) of the Act. Accordingly, amount of Rs. 11,56,764/- which were the expenses incurred by the assessee for earning the interest under the head 'income from other sources' was rightly allowed by....

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.... utilized to make FDRs in question which have yielded interest income. The FDRs were kept in the bank as margin money of obtaining loans. In support of the connection of the interest paid on loan with the FDRs in question, the assessee has enclosed the relevant account statements, details of interest paid etc. before the Assessing Officer as is evident from para 2.4 of the assessment order, the Assessing Officer has not negated the connection between the interest paid on loan and FDRs. The only difficulty made out by the Assessing Officer to deny deduction claimed under section 57(iii) was that in view of the voluminous details, interest paid to ICICI and IDBI for the funds utilized for the FDRs, cannot be exactly determined. Therefore, c....