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TMI Blog2018 (10) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... could have taken over draft the FD and utilised the funds towards the purchase of shares of group company. The assessee opted for second option. The source of interest earning remained intact. In doing so, the assessee had to incur interest expenditure on overdraft. The source of income and application of income is same, i.e. FD. Therefore, in our considerate view, netting off of interest has to be allowed to the assessee. Our view is also fortified by the judgment in the case of ACG Associated Capsules [P] Ltd [2012 (2) TMI 101 - SUPREME COURT OF INDIA]. Ground No. 1 is accordingly allowed. Disallowance of short term capital loss - Held that:- It is true that the assessee accepted the shares of M/s Varun Industries Ltd as security ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the FDR on which the alleged interest income has been earned by the appellant. 3. That on the facts and circumstances of the case and in law the Ld. CIT (A) was not justified in upholding the action of the AO in making disallowance of Short term Capital Loss of ₹ 29,19,689/- incurred by the appellant on sales of shares of M/s Varun Industries pledge with the appellant as security for granting loan to Mrs. Swati Rajesh Shah. 3. Briefly stated, the facts of the case are that the assessee is a trust formed on 04.02.2011. The appellant s trust is neither registered u/s 12A/10(23C) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] nor registered under the Societies Registration Act. Therefore, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and to protect the regular source of income, the assessee had taken over draft facility from the bank on which it paid interest. It is the say of the ld. AR that what is taxed under the head income from other sources is the net interest. For this proposition, strong reliance was placed on the judgment of the Hon'ble Supreme Court in the case of ACG Associated Capsules [P] Ltd 343 ITR 89. Reliance was also placed on the judgment of the Hon'ble Punjab and Haryana High Court in the case of Maruti Employees Cooperative House Building Society Ltd.320 ITR 254. 8. Per contra, the ld. DR strongly supported the findings of the AO. It is the say of the ld. DR that there is no nexus between the interest expenditure and earning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lent ₹ 90 lakhs from which Swati Rajesh Shah purchased 77000 shares of M/s Varun Industries. Swati Rajesh Shah pledged the shares with the assessee as security against loan of ₹ 90 lakhs. Subsequently, the assessee sold the shares of M/s Varun Industries which were purchased @ 116.88 and sold at different prices varying from 10.28 to 14.05. Loss in sale of shares was claimed as short term capital loss by the assessee. 13. It is true that the assessee accepted the shares of M/s Varun Industries Ltd as security against the loan given to Swati Rajesh Shah. It is equally true that the assessee has nothing to do with the profits /losses in the sale of shares of M/s Varun Industries Ltd. If the sale transactions would have res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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