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TMI Blog2011 (2) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... while determining taxable income. It is true that under section 57, only that expenditure is allowable which is incurred wholly and exclusively for such income. It is not a case where interest expenditure incurred by assessee per se was not allowable. But, it is a case where after examining all facts only conclusion could be arrived at regarding allowability or otherwise of the expenditure. Further, the assessee's alternative claim of allowing expenditure, in any case, as business expenditure also cannot be ignored because the funds had been invested in assessee's proprietary business. Thus, conclusion either way could be arrived at after long drawn reasoning. Under such circumstances, the learned CIT(A) rightly observed that it was highly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of interest of Rs. 4,26,569 and claimed loss of Rs. 3,36,306 under this head, which is not allowable. The assessee, in its reply enumerated in the order under section 154, pointed out that the loans raised by the assessee in his personal books have been invested in proprietary business and, therefore, the interest paid was for earning business income and, hence, allowable as deduction out of business income. It was further pointed out that in the computation of income, interest paid was inadvertently shown as the income from other sources instead of as deduction from business income and the interest paid was fully allowable. The AO, however, observed that under section 56 of the Act expenditure is deductible only when it is laid wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, submitted that the AO had duly applied his mind before allowing this deduction. Further, it is highly debatable issue whether the assessee's income was assessable under the head "Income from other sources" or as "Income from business". 6. We have heard the rival submissions and have perused the record of the case. The assessee had claimed the interest payment against income from other sources in the statement of total income filed by it along with the return. The AO passed the order under section 143(3) and specifically referred to the returned income as per statement of total income. Thus, impliedly, he accepted the assessee's contention that this interest expenditure was incurred for earning the income taxable under the head "Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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