TaxTMI 
TaxTMI 
2026 (2) TMI 1468
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....f hearing, it was fairly admitted by the learned Departmental Representative that the tax effect involved in the disputed issues arising in the present appeals is much below the revised monetary threshold of rupees sixty lakhs prescribed for filing departmental appeals before the Tribunal, as stipulated under CBDT Circular No.09/2024 dated 17.09.2024. It was also not the case of the Revenue that the present appeals fall within any of the exceptions carved out in the said Circular. In view of this admitted position and having regard to the binding nature of the Circular, which expressly applies even to pending appeals, the maintainability of the Revenue's appeals stands squarely governed by the said Circular. 3. The Circular issued by the Central Board of Direct Taxes under section 268A of the Act embodies a clear and deliberate policy decision to regulate departmental litigation and to ensure that appeals involving insignificant tax effect do not occupy the time of appellate fora. Such Circulars are binding on the Revenue authorities and, once the conditions stipulated therein are satisfied, the Tribunal is obliged to give effect to the same. 4. Once it is admitted that the t....
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....he issue relating to interest expenditure was restored to the file of the learned Commissioner (Appeals), culminating in the impugned appellate order dated 26.09.2025. 9. In the impugned order, the learned Commissioner (Appeals) granted only partial relief to the assessee by restricting the deduction of interest expenditure to the extent of interest income, placing reliance on the decision of the Tribunal in Cascade Holdings Pvt. Ltd. v. DCIT. It is this restriction which has been assailed by the assessee in the present cross objections. 10. The learned counsel for the assessee drew our attention to the decision of the Tribunal in the assessee's own case for Assessment Year 2012-13 in ITA No.4430/Mum/2017, wherein, after examining the nature of borrowing and its nexus with the income assessable under the head "Income from other sources", the Tribunal categorically allowed the entire interest expenditure claimed under section 57 of the Act. The relevant findings of the Tribunal are reproduced below: "23. Ground No. 2 is similar to the ground No. 1 in the case of Shri Sudhir S. Mehta in ITA No. 5799/Mum/2015. As agreed by both the parties that whatever view may be take....
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....g Officer. 29. The AO following the approach adopted in earlier round of litigation rejected the assessee's claim of deduction on account of interest and disallowed interest payment of Rs. 2,46,33,261. The learned CIT(A), vide impugned order, partly allowed the ground raised by the assessee on this issue and held that the main purpose of incurring the interest expenditure was not earning income from dividends and unless the interest expenditure was incurred solely for the purposes of making or earning dividend income, no deduction is possible under section 57 of the Act. The learned CIT(A) further held that in the acquisition of shares for capital gains, the dividend income is incidental and not a major factor, and it is thus clear that the sole purpose of borrowing by the assessee @12% per annum cannot be for the purpose of earning dividend income. Accordingly, the interest expenditure was held to be not allowable against dividend income. The learned CIT(A), however, allowed the interest expenditure only to the tune of Rs.15,73,548 which is the share trading profit. Being aggrieved, both assessee and Revenue are in appeal before us. 30. We have considered the....
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....9;ble Supreme Court in Seth R. Dalmia (supra), upheld the allowance of finance expenditure as deduction under section 57(iii) of the Act against the income by way of dividends, finance charges and interest which were shown as income from other sources by the taxpayer. Therefore, respectfully following the aforesaid decision of the Hon'ble Supreme Court in Seth R. Dalmia (supra), we are of the considered view that the assessee is entitled to claim a deduction of interest expenditure under section 57 of the Act since receipt of dividend is merely due to the shareholding of the assessee and the interest expenditure has nexus with the income under the head "income from other sources including dividend income even though not direct. Accordingly, the AO is directed to allow the interest expenditure claimed by the assessee under section 57 of the Act. As a result, ground. No. 3 raised in assessee's appeal is allowed, while ground No. 2 and 3 raised in Revenue's appeal is dismissed." 12. We have carefully considered the rival submissions and perused the material on record. The legal position emerging from the binding precedents is that section 57 does not mandate that the ex....