TaxTMI 
TaxTMI 
2018 (11) TMI 779
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....ee filed return of income admitting the loss of Rs. 9,24,278/-. During the year under consideration, the assessee received the income from the following sources : (i) Income from house property Rs.1,26,000 (ii) Loss from business Rs.82,94,468 (iii) Income from long term capital gains Rs.72,44,190 The loss admitted by the assessee was business loss relating to interest charged by the Partnership firm on overdrawals from the current account/capital account of the partnership firm. During the assessment proceedings, the Assessing Officer (AO) found that the assessee's current account/capital account of the partnership firm has shown debit balance of Rs. 1,77,10,778/- as on 31.03.2006 which was increased to Rs. 7,04,16,001/- as on 31.....
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....of income declared by the assessee such as income from house property and the capital gains. The AO reworked the interest, taking the net of debit and credit balances which worked out to @Rs.33,94,786/- to be payable to the firm. Finally, the AO held that since, there is no business carried on by the assessee and the assessee being partner of the firm, the interest and the losses takes the character of the share income from the firm which is exempt u/s 10(2A) of the Act for taxation and accordingly held that the loss or interest relatable on such share of loss is also exempt and cannot be included in total income. Accordingly the AO did not allow the assessee's claim of interest and recomputed the income rejecting the set off of business l....
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.... non business purposes is against the facts of the case. During the year under consideration, the firm has charged the interest on debit balances which amounted to Rs. 82,94,468/- and the same n was claimed by the assessee as loss from business and eligible for set off against the long term capital gains. The assessee has sold the residential property on 01.07.2011 and the withdrawals were used for the purpose of renovation of the house, therefore eligible for set off of loss against the capital gains income. Thus the Ld.AR requested to set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. 5. On the other hand, the Ld.DR supported the orders of the lower authorities. 6. We have heard both the parties and perused the m....
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....ment of the property as per section 48 of the act. No other deductions are allowed while computing the capital gains. Interest if any on the borrowed funds for construction of the house is allowed under the head income from the property. The loss claimed by the assessee towards the interest payment to the firm is neither business loss nor the loss incurred for acquiring the property and not allowable deduction as per section 48 of the Act. 6.2. To allow the set off business loss against the current years income, the assessee has to establish that she has incurred the loss during the course of business. The AO as well as the Ld.CIT(A) have given finding that the borrowals were used for investment or for personal purposes but not for any bus....