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TMI Blog2019 (10) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... d every case, expenditure would be allowed only, when there is resultant income. In other words, there cannot be any loss in any activity which results income from other sources . All the details were before the CIT(Appeals) but instead of pin pointing any concrete diversion of interest bearing funds; CIT(Appeals) only assumed that some funds might have been used by the assessee for some other purposes. The department has been consistently accepting the claim in earlier years and in subsequent years. It appears that in the beginning, assessee has more income under the head income from other sources as than the interest expenditure, but in Assessment Year 2006-07, 2007-08 and 2009-10, the interest expenditure was more than income, in spite o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is much more stronger on merits in the year under consideration. The order being perverse to the above extent, and not based on a proper appreciation of facts, the same deserves to be reversed. 2. At the outset, the respective representatives of the parties submitted that the facts are identical as were in the ITA No.2658/Ahd/2015. The only issue to be decided is related to allowance of the interest expenditure u/s 57 of the Income Tax Act, 1961 (hereinafter called as 'the Act') amounting to ₹ 25,05,190/-. The respective representatives of the parties have adopted the same argument as were in ITA No.2658/Ahd/2015 in which we have followed the decision of the coordinate bench and directed the A.O. to delete addition by observing as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are the persons who have advanced the money to the assessee and to whom interest was paid. To these very persons, interests have also been paid in the present year. Thus, the loan was taken from these persons long back and every year assessse has been paying at the same rate of interest. In spite of the search neither in the earlier year nor in the subsequent years, claim of the assessee was disputed that the money taken from them was not used by the assessee for earing income which is to be assessed as "income from other source". In the present year, Ld. First Appellate Authority has allowed the deduction to the extent, he assumed that assessee must have incurred interest expenditure up to 95% of the interest income earned by him. In oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead "income from other sources" as than the interest expenditure, but in Assessment Year 2006-07, 2007-08 and 2009-10, the interest expenditure was more than income, in spite of that loss under the head "income from other source" was allowed by the ld. Assessing Officer in scrutiny assessment. Thus considering the past history and stand of the revenue itself, we are of the view that ld. Assessing Officer has erred in making the disallowance. Ld. Commissioner of Income Tax (Appeals) also failed to appreciate that total expenditure is to be allowed which is incurred wholly and exclusively for earning income. It cannot be restricted in proportion of income. We allow the ground of appeal raised by assessee and consequently reject the ground r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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