TaxTMI 
TaxTMI 
2023 (1) TMI 527
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....to the Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal: "1. The learned CIT(A) has erred both in law and on facts of the case in confirming the action of AO in disallowing interest expense paid to Gokul Overseas of Rs. 1,15,64,054/- u/s. 57 of the Act. 2. The learned CIT(A) has erred both in law and on facts of the case in holding that there was a nexus between the funds withdraw from Gokul Overseas and funds used for acquiring immovable property. 3. Alternatively and without prejudice, the interest expense may be allowed to be capitalized and added to the cost of acquisition of the immovable property. 4. Both the lower authorities have passed the orders without properly appreciating the facts....
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....ing liability of the assessee on account of withdrawal from the firm was standing at Rs. 10,52,07,072/- on which assessee incurred interest expenditure of Rs. 1,15,64,054/- only. 5. The assessee, likewise, has made deposits and advanced loan to two parties namely M/s Gokul Infracon Pvt. Ltd and M/s Gokul Foundation on which, she was also earning interest income @ 12%. As such, the assessee for the year under consideration earned gross interest income of Rs. 1,22,72,751/- only. The assessee in the return of income has adjusted the interest expenses of Rs. 1,15,64,054/- incurred on borrowing from the firm against interest income of Rs. 1,22,72,751/- only. Thus, the net interest income was only offered to tax. 6. However, the AO found that t....
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.... interest paid and interest income earned. It is seen from the material on record that the funds transferred to the appellant from Gokul Overseas amounting to Rs.3,14,91,750/- have been used to make payment for a plot to Gokul Infracon Pvt. Ltd. In fact even the fees for stamp duty and registration of the said plot has been made out of the funds of Gokul Overseas, on which the appellant has claimed interest expenditure. The appellant's submission that she had sufficient funds of her own to make the said investment cannot be accepted since the AO has very clearly established the nexus between the funds withdrawn from the firm and the investment made by the appellant in the plot, from which she has not earned any income. Therefore, I find no ....
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....roversy arises before us further the assessee is eligible for deduction of the interest expenses paid on the money borrowed from the partnership firm which was utilized in making the personal asset being land against the interest income earned from the deposits made with the parties namely M/s Gokul Infracon Pvt. Ltd and M/s Gokul Foundation. Apparently, it seems to us that there is no nexus between the interest expenses viz a viz the interest income. However, the assessee could have easily avoided the interest expenses. The assessee instead of borrowing the money from the partnership firm on interest basis could have withdrawn money which was deposited with the companies as discussed above on which she was earning the interest income. In s....
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.... the reason that the assessee has claimed the interest expense against the interest income which evidences that the assessee has not claimed any interest expenses as capital in nature. Moreover, if we apply the reasoning given in the immediate preceding paragraph that had the assessee not borrowed the money from the partnership firm on interest basis and would have taken the money out of the deposits made with the companies, there would not have been any question of the interest expenses whether capital or revenue in nature. 10.2 Before parting it is also important to highlight that the assessee has incurred interest expenses of Rs. 1,15,64,054/- on total outstanding of Rs. 10,52,07,072/- whereas amount invested in land property was of Rs.....