2021 (11) TMI 883

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....he order dated 24.06.2016 passed by Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment year 2009-10. The appeal was admitted by an order dated 20.09.2018 by a bench of this Court on the following substantial questions of law: (a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that on the borrowings in question, the appellant was neither entitled to claim any deduction under Section 57(iii) of the Income Tax Act, 1961nor for a deduction under Section 36(1)(iii) of the Act? (b) Whether on the facts and in the circumstances of the case, the finding of the ....

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....3. The appellant filed the return of income for the Assessment Year 2009-10 declaring an income of Rs. 5,34,23,338/- after claiming a loss of RS,.81,95,426/- under the head 'income from other sources', which was arrived at after reducing the interest payable on the loan of Rs. 2,84,47,557/- against the interest income of Rs. 2,02,52,131/- earned from inter corporate deposits and loans to shareholders under Section 57(iii) of the Act. The return of income was taken up for scrutiny assessment and the Assessing Officer passed an order on 30.11.2011 making a disallowance of a sum of Rs. 81,95,426/- under Section 37 of the Act. The aforesaid order was challenged before the Commissioner of Income Tax (Appeals) and was upheld by an order d....

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.... 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Section 57(iii) of the Act mandates that income chargeable under the head 'income from other sources' shall be computed after making a deduction of any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income. Section 57(iii) of the Act does not require that the expenditure incurred is deductible only if expenditure has resulted in actual income. As long as the purpose of incurring expenditure is to earn income, the expenditure would have to be allowed as a deduction under Section 57(iii) of the Act. Under Section 57(iii) of....