TaxTMI 
TaxTMI 
2018 (5) TMI 242
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....2. The 1st ground raised by the assessee in this appeal is against the order of the Ld. CIT(A) confirming the disallowance of interest expenditure of Rs. 85,19,732/- claimed by the assessee. 3. Briefly stated, the facts of the case are that in the computation of income, under the head 'Income From House Property', the assessee has shown loss of Rs. 85,19,732/-. The assessee had claimed deduction u/s 24 on account of interest payment. The Assessing Officer (AO) found that the assessee was not having any house property, there was only under-construction building, expenses incurred on which was shown under the head 'Capital WIP'. As per the AO, the said building was demolished in the second half of the financial year (FY) 2010-11 and theref....
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....pite the fact an assessee had satisfied all the requisite conditions under Sec. 24, he would however stand disqualified from raising the claim, for the reason that the property had ceased to be in existence. We are however of the considered view, that a careful perusal of Section 24, which contemplates that the deductions are to be allowed at the time of computing the 'Income chargeable under the head 'Income from house property', thus presupposes the very existence of the 'Annual Value' of the property, failing which, the entitlement of the assessee towards claim of deductions contemplated therein, would stand jeopardized. Thus, now when the determination of the 'Annual Value', as stands gathered from a conjoint rea....
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.... 24 of the 'Act', however nothing emerges from the statute, which therein contemplates the jeopardizing of the claim of the assessee towards interest on borrowed capital, in a situation as that in the case of the present assessee, where though the property was in existence during part of the year, but thereafter had ceased to exist during the remaining part of the year. We are of the considered view, that in the absence of anything being provided in the statute, as regards restricting the entitlement of the assessee towards the 'Interest on borrowed capital', only for the period during which the property had been in existence, no such interpretation which would militate against the plain meaning of the said statutory provisi....
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....erred in sustaining the order of the AO and thus misinterpreting the scope and gamut of Section 24(b), had wrongly disallowed 50% of the aforesaid 'Interest on borrowed capital' of Rs. 40,63,453/- in the hands of the assessee. We thus set aside the order of the CIT(A), and allow the appeal filed by the assessee." 6.1 Facts being identical, we follow the above order of the Co-ordinate Bench and allow the 1st ground of appeal. 7. The 2nd ground raised by the assessee in this appeal is against the order of the Ld. CIT(A) in confirming the action of the AO of not allowing claim of set off of interest expenditure to the tune of Rs. 1,02,23,721/- against interest income earned although direct and proximate nexus is established among sur....
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.... so as to entitle him to claim the expenditure of interest from the income received in the form of interest, (iii) as the assessee has not borrowed for the purpose of depositing in FDs to earn interest, a co-relation between the interest earned and interest paid cannot be established and therefore, netting of interest in not available to the assessee. On the above reasons, the Ld. CIT(A) differed from the decision of his predecessor and dismissed the appeal filed by the assessee. 10. Before us, the Ld. counsel of the assessee files a Paper Book (P/B) containing (i) copy of ITAT order for Ay 2011-12, (ii) copy of computation of income for AY 2012-13, (iii) copy of computation of income for AY 2013-2014, (iv) copy of assessment order u/....
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....tted before the Ld. CIT(A) that as there is direct and proximate nexus between borrowed money and money placed as short term fixed deposits with bank, interest expenditure was claimed as set off against interest income. It is stated that the same is evident from the Fixed Deposit ledger account as well as Bank Book for the year under consideration as well as of preceding year. 12.1 We find that in the present case the above facts were not verified either by the AO or the Ld. CIT(A). Therefore, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh order after examining the contentions of the assessee delineated at para 12 hereinbefore. Particularly, the AO would examine the Fixed Deposit led....