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TMI Blog2014 (4) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER Per TS Kapoor, AM: These are five appeals filed by the revenue against separate orders of Ld CIT(A) all dated 29.4.2011. These appeals were heard together and common issue is involved in all these appeals, therefore, for the sake of convenience a consolidated common order is being passed. 2. The sole issue involved in these appeals is the grievance of revenue by which the Ld CIT(A) has deleted the addition made by the Assessing Officer which he had made by disallowing the claim of assessee u/s 24 of the Income Tax Act, 1961 which was claimed by the assessee as expenditure of interest on borrowed capital. The revenue is also aggrieved with the contentions of Ld CIT(A) in I.T.A. Nos.3423 to 3426 with the finding of Ld CIT(A) by which he had held that in case of completed assessment, the addition cannot be made u/s 153A/153C without incriminating documents found at the time of search. In I.T.A. No.3425/Del/2011 the revenue has taken a further ground of appeal by which it is aggrieved by the action of Ld CIT(A) who had allowed the relief for an amount of Rs..21,375/- which the Assessing Officer had made on the basis of bogus bill books found during search. 3. On meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which must have direct nexus or connection with the let out property. This section view is not concerned with the mere using of the funds that are borrowed, but, that the borrowal must be for investment on those assets, income from which are liable to be taxed under the head Income from House Property . The absence of direct nexus between the amount borrowed and the property does not entitle the assessee for claim u/s 24 deduction of the interest paid by him. 4. Similar findings were made by Assessing Officer to disallowance of interest on capital in other assessment years. The Ld CIT(A) has deleted this addition by holding as under for assessment year 2004- 05:- From the copy of balance sheet for the year ending 31.3.2004 it is noted that the appellant is having un-secured loan for Rs..1,69,73,247/- which is the sum total of inter corporate deposits from M/s KLJ Resources Ltd and M/s Silvassa Plast. It is further noted that the interest payment made to these parties which has been debited in the P L A/C is for Rs..20,41,092/- which has been charged as one of the expenses against the rental income for Rs..58.66 lakhs. From the schedule of fixed assets in the balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st for Rs..66,80,286/- on the borrowing of funds, out of which proportionate sum of Rs..10,92269/- has been claimed as expenses against rental income and the remaining Rs..55,88,027/- is capitalized to the undergoing project of Distt. Centre, Wazirpur. Appellant has also submitted that opening balance of funds borrowed from M/s Silvassa Plast and M/s KLJ Resources Ltd. has been repaird by taking further borrowing from KLJ Polymers and chemicals Ltd. and others which has proportionately attributed against the building constructed at DLF, Moti Nagar, Delhi from which rental income has been earned. From these facts it is clear that there is a direct nexus between the amount borrowed on which interest has been paid and the acquisition/construction of the impugned let out property which has been acquired utilizing the borrowed capital funds. Therefore, in terms of section 24 of the Income Tax Act, the interest paid is allowable as a deduction. Accordingly, the addition of Rs..10,92,269/- made by the Assessing Officer is directed to be deleted. Assessment year : 2007-08: During the year the appellant has paid total interest for Rs..1,40,88,151/- on the borrowing of funds, out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Shri Rajesh Singh) the employee of the assessee company. The total of all reimbursement made to the employee during the year on account of medical reimbursement and books and periodicals which has been debited in the appellant s books of accounts for F.Y. 2006-07 comes to Rs..21,375/- and this has been disallowed by the Assessing Officer while the appellant has claimed that these payments have been made to this employee as per the policy of the company, whereby similar reimbursement have been made to other such employees. It has been further submitted that the total of the amounts written in the seized documents ids less than Rs..21,375/- and that while their expenses may have been fraudulently claimed by the employee, but the payments have been made in good faith and as per appellant s policy of reimbursement and from its regular books of accounts and therefore is an allowable expenditure. The appellant s claim has been examined from the ledger Account as well as the seized documents and the source of payment is found to be correct and accounted for. Additionally this amount is otherwise allowable u/s 28 of the Income Tax Act, 1961 as a business/trading loss in terms of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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