2025 (12) TMI 842

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....being an individual and director in M/s. Silver Global Services Pvt. Ltd. had earned interest income of Rs. 6,48,842/- from fixed deposits with Model Co-operative Bank Ltd. and in order to avoid premature encashment of FD had taken loan against such FD from Model Co-operative Bank Ltd. and paid interest to the said bank to the tune of Rs. 8,39,626/- and since the interest paid was more than the interest received, therefore, has not shown such interest earned. 3. Thus, Assessing Officer (AO) reopened the case of Assessee u/s 147 of the Act by issuing notice u/s 148 of the Act dated 20.10.2025 and asked to explain "as to why the interest income of Rs. 8,25,151/- should not be added in the total income of the assessee". 4. The assessee b....

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....putation of income. What thus logically follows is that even in a situation in which proximate or immediate cause of an expenditure was an event unconnected to earning of the income, in the sense that the expenditure was not triggered by the objective to earn that income, but the expenditure was, nonetheless, wholly and exclusively to earn or protect that income, it will not cease to be deductible in nature. It is also important to bear in mind the fact that a borrowing against fixed deposit cannot be considered in isolation of a fixed deposit itself inasmuch as, going by the admitted facts of this case, the interest chargeable on the fixed deposit itself is linked to the interest accruing and arising from the fixed deposit. On these facts,....

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....that in the case of a business assessee, and in a situation in which the borrowings against fixed deposits were resorted to for use in business, consideration for end use of funds so borrowed would be relevant because the interest deduction is claimed as a business deduction under section 36(1)(iii). That aspect of the matter, however, is academic in the present context as the limited issue for our consideration is whether or not, on the facts before us, the interest on borrowings against the fixed deposits could be said to protect the interest income from fixed deposit interest and thus, incurred wholly and exclusively for the purposes of earning such income." 7. The Ld. Commissioner though reproduced the submissions of the Assessee in ....