TaxTMI 
TaxTMI 
2021 (1) TMI 915
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....come from other sources inter alia, and after considering the submissions of the appellant and judicial precedents placed on record, passed an order and hence assessment order was neither erroneous nor prejudicial to the interest of the revenue and hence the order of revision is bad in law. 2. The learned Pr. CIT failed to appreciate the direct nexus between earning and payment of interest by appellant and erred in holding that the expenditure on interest claimed by the Appellant under Section 57(iii) of the Act is not tenable in law, by applying the wrong principle of law and ignoring the judicial precedents relevant to the facts of the appellant and hence the revision is bad in law. 3. Without prejudice, that the learned Pr.CIT failed to appreciate that on the issue of claiming deduction from Income from other sources, two possible view exist and thus when two views are possible than the assessment order cannot be termed as erroneous and prejudicial to the interest of the revenue and hence the order of revision is bad in law. 4. The appellant craves leave to add, amend, alter or delete and of the above grounds of appeal." 2. Briefly stated, the asses....
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....id deposits was permissible under law, the PCIT was of the view that the A.O while framing the assessment had erred in accepting the assessee's claim for deduction of the interest expenditure against the interest income. In the backdrop of his aforesaid observation the PCIT 'set aside' the assessment order passed under Sec.143(3), dated 21.11.2017, and directed the A.O to frame a de novo assessment, in accordance with law, after giving a proper opportunity of being heard to the assessee. 4. Aggrieved, the assessee has assailed the order passed by the PCIT under Sec. 263, dated 03.12.2019 in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee Dr. K. Shivaram, Senior Advocate took us through the facts of the case. It was submitted by the ld. A.R that as the A.O in the course of the assessment proceedings had queried to his satisfaction as regards the assessee's entitlement for deduction of the interest paid on the loan raised from the bank against the interest received on the FDR's held by the assessee, and finding it in order had accepted the same, therefore, the PCIT had clearly exceeded his jurisdiction and taken recourse to the revisional act....
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....Ltd. (2016) 69 taxmann.com 103 (Bom). On the basis of his aforesaid contentions, it was submitted by the ld. A.R that as the PCIT had clearly exceeded his jurisdiction and had dislodged the well reasoned order passed by the A.O under Sec. 143(3), dated 21.11.2017, the same, thus, could not be sustained and was liable to be vacated. 5. Per contra, it was submitted by the ld. Departmental Representative (for short 'D.R') that as the A.O while framing the assessment had failed to make any verifications as regards the assessee's claim for deduction of the interest paid on the loans against the interest received on the FDR's, therefore, the PCIT had rightly exercised his revisional jurisdiction and 'set aside' the assessment order with a direction to the A.O to pass a de novo order after affording an opportunity of being heard to the assessee. It was submitted by the ld. D.R that as the interest paid by the assessee on the loan taken (on security of the FDR's) was not in the nature of an expenditure laid out or expended wholly and exclusively for the purpose of making or earning such interest income, thus, the allowing of the same as a deduction by the A.O clearly militated against t....
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....by the assessee from the bank on security of fixed deposit could not be reduced from his income by way of interest on the fixed deposit placed by him in the bank. The issues which came up for consideration before the Hon'ble Apex Court were as under: "1. Whether, on the facts and in the circumstances of the case, the assessee is to be assessed on the gross amount of interest received by him on his fixed deposit or on the interest received as reduced by the amount of interest paid on the loan taken on the security of such deposit ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding; (i) the act of making deposit and the act of borrowing on such deposit cannot be viewed as representing two different transactions, (ii) there is thus a nexus between the deposit and the borrowing; (iii) the principle of mutual dealings could be inferred." Answering the aforesaid issues which were inextricably interlinked or in fact interwoven, it was observed by the Hon'ble Apex Court, as under: 2. To take the facts of one of the two appeals before us as illustrative, the assessee had pu....