TaxTMI 
TaxTMI 
2022 (7) TMI 1262
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....acts and circumstances of the case, the learned CIT(A) has erred in confirming the assessed income at Rs.29,72,185/- as assessed by the A.O instead of Rs.23,95,877/- (before claiming deduction u/s.57 of Rs.29,72,185/-). The said assessed income is not correct and is unjustified, unwarranted and uncalled for. 3. That the appellant reserves the right to add, amend or modify any grounds of appeal at the time of hearing." 2. Succinctly stated, the assessee who is a promoter director of GDR Rungta group of institutions had filed his return of income for AY 2013-14 on 28.03.2013, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee as against his interest income of Rs.10,75,877/- had claimed deduction u/s.57 of the Act of Rs.29,72,185/- towards interest paid on unsecured loans. It was observed by the A.O that the assessee after claiming the aforesaid deduction had shown net interest of (-) Rs. 18,96,308/. On being queried as regards the maintainability of his claim for deduction of interest expenditur....
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....st paid to OBC ( Temporary OD) 110176 Total 2972185 Total 1075877 On a perusal of the aforesaid details, we find that the assessee had claimed deduction of interest paid of Rs.29,72,185/- as against the interest income of Rs.10,75,877/-. As such, the assessee had claimed payment of excess interest as against that received from the aforementioned parties. 8. Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not the interest paid by the assessee to the aforementioned 5 parties was rightly claimed as a deduction against the interest income that was received by him during the year under consideration. Before adverting any further, we deem it fit to cull out the provision of section 57(iii) of the Act, as the scope and domain of the same is relevant for adjudication of the present appeal and, reads as under: "57. The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely :- (i) xxxxxxxx (ii) xxxxxxxx (iii) any other expenditure (not being in the nature of capital expenditure) laid ....
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....y 1000000 07.12.2012 Dynasty Tradelink Pvt. Ltd. 2100000 07.12.2012 GDR Educational Society 2100000 07.12.2012 Dynasty Tradelink Pvt. Ltd. 1400000 07.12.2012 GDR Educational Society 1400000 12.12.2012 Dynasty Tradelink Pvt. Ltd. 1500000 12.12.2012 GDR Educational Society 1500000 15.12.2012 Dynasty Tradelink Pvt. Ltd. 2000000 18.12.2012 GDR Educational Society 2000000 17.12.2012 Dynasty Tradelink Pvt. Ltd. 2000000 18.12.2012 GDR Educational Society 2000000 21.12.2012 Dynasty Tradelink Pvt. Ltd. 1000000 21.12.2012 GDR Educational Society 1000000 24.12.2012 Dynasty Tradelink Pvt. Ltd. 1000000 24.12.2012 GDR Educational Society 1000000 29.12.2012 Dynasty Tradelink Pvt. Ltd. 1000000 29.12.2012 GDR Educational Society 1000000 02.01.2013 Dynasty Tradelink Pvt. Ltd. 1500000 02.01.2013 GDR Educational Society 1500000 04.01.2013 Dynasty Tradelink Pvt. Ltd. 1250000 04.01.2013 GDR Educational Society 1250000 &nbs....
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....t bearing loans from M/s Dynasty Tradelink Pvt. Ltd. for the purpose of making or earning interest income from GDR Educational Society, therefore, the interest expenditure so incurred would clearly fall within the realm of the deduction contemplated under Sec. 57(iii) of the Act. At this stage, we are reminded of the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Rajendra Prasad Moody (1978) 115 ITR 519 (SC), wherein, the Hon'ble Apex Court while deliberating on the scope and domain of Section 57(iii) of the Act, had observed, that Section 57(iii) of the Act only requires that the expenditure must be laid out or expended wholly and exclusively for making or earning income and not that such income must have been earned. Also, a similar view had been taken by the Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. Pankaj Munjal Family Trust, 326 ITR 286 (P&H). It was observed by the Hon'ble High Court that though the assessee before them had raised interest bearing funds at a higher rate of interest from its family concerns for making investments in lower interest yielding shares, no adverse inferences as regards allowability of the asse....
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....nt with the contention of the Ld. AR that interest expenditure incurred on the interest bearing loans which are raised wholly and exclusively for the purpose of earning of interest come by advancing the same on interest would be allowable as a deduction within the meaning of Section 57 (iii) of the Act. However, we find that neither the complete facts which would prove to the hilt the existence of an inextricable nexus between the aforesaid interest bearing loans and the interest generating advances is discernible from the records, nor any such claim of deduction of interest is found to have been raised by the assessee in its return of income for the immediately preceding year i.e AY 2012-13. Be that as it may, as the issue as regards the allowability of the assessee's claim for deduction under Sec. 57(iii) of the interest paid on the loans raised from the aforementioned three parties cannot be adjudicated in the absence of complete set of facts before us, therefore, in all fairness we restore the matter to the file of the A.O with a direction to re-adjudicate the same in the backdrop of our aforesaid observations. In case the assessee in the course of the set-aside proceedings is ....