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TMI Blog2014 (4) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... short-term capital loss, though assessee had not claimed any such loss in the return of income. Second grievance is that ld. CIT(Appeals) allowed the claim of interest payment of Rs. 14,89,071, against an interest receipt of Rs. 38,81,885/-, though the assessee failed to establish the nexus. 3. Vis-a-vis the first issue, against interest receipt shown under the head "income from other sources", assessee had adjusted loss incurred on surrender of Unit Linked Insurance products. The loss adjustment was of Rs. 25,88,437/-. As per the Assessing Officer, assessee himself had admitted that the claim was wrongly made. Such adjustment of loss was, therefore, disallowed by the Assessing Officer. 4. In her appeal before the ld. CIT(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, as per ld. D.R. such claim could not be allowed. Reliance was placed on the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. -vs.- CIT (284 ITR 323). 7. Per contra, ld. A.R. supported the order of ld. CIT(Appeals). 8. We have heard the rival contentions and perused the material available on record. It is not disputed by the Revenue that the loss arose to the assessee on account of surrender of single premium equity linked insurance policies, which were used for making investments in Mutual Fund. Revenue has also not disputed the claim of assessee that resulting loss on account of such surrender of single premium insurance policy could be treated as short-term capital loss. It's only grievance is that assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had advanced interest-free loans out of loans taken on interest from Bank. As per the Assessing Officer, such loans were taken on the security of Fixed Deposits. Since loans were not deployed for investments earning interest, as per the Assessing Officer, the interest paid on such loans could not be allowed as a deduction against the interest receipt. He thus disallowed the claim of interest of Rs. 14,89,071.08. 10. Assessee in her appeal before the ld. CIT(Appeals) argued that the Assessing Officer fell in error factually. According to the assessee it had first raised the loans from M/s. Karur Vysya Bank Ltd. The Fixed Deposits were made out of such loans. Therefore, as per the assessee the nexus between the Fixed Deposits and lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings before the Assessing Officer as well as before him. After perusing such Bank statement, ld. CIT(Appeals) has also given a finding that the Fixed Deposits on which interest was earned, were made out of loans taken from the Bank. Submission of ld. D.R. that the Fixed Deposits were made on dates prior to raising of the loans has not been proved or substantiated by him. Once Fixed Deposits were made out of loans taken from the Bank, in our opinion, the nexus stood when established. Even otherwise, assessee was having sufficient own funds with her for giving interest-free advances. Hon'ble Mumbai High Court in the case of CIT -vs.- Reliance Utilities and Power Ltd. (supra) at para 10 of its order had held as under :- "If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal". We are, therefore, of the opinion that ld. CIT(Appeals) was justified in allowing the interest paid on loans to be deducted from the interest earned. We do not find any reason to interfere with the order of ld. CIT(Appeals). Grounds 3 and 4 of the Revenue are also dismissed. 15. In the result, appeal of the Revenue stands dismissed. Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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