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TMI Blog2019 (12) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... or residence purpose of the directors, assessee s claim cannot be rejected. Tribunal in Stuish Capital Services Pvt. Ltd. [ 2018 (5) TMI 1948 - ITAT MUMBAI] while considering the allowability of depreciation on a premise taken on lease for use of director s residence allowed assessee s claim by holding that since the company is engaged in share trading, the premise is used by directors for official work also, hence, as per CBDT Circular and the decision of the Hon ble Delhi High Court in CIT v/s Modi Industries Ltd. [ 1994 (4) TMI 61 - DELHI HIGH COURT] assessee s claim is allowable. Disallowance of interest expenditure - AO on the basis of AIR information called upon the assessee to reconcile the interest income earned by it duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i, pertaining to the assessment year 2012 13. 2. In ground no.1, the assessee has challenged the disallowance of rental expenses of ₹ 65.25 lakh. 3. Brief facts are, the assessee company is engaged in the business of investment in shares, securities and derivatives. For the assessment year under dispute, the assessee filed its return of income on 20th September 2012, declaring total income of ₹ 57,47,631. Subsequently, the assessee filed a revised return of income on 11th February 2014. During the assessment proceedings, the Assessing Officer noticing that the assessee had claimed deduction of ₹ 65.25 lakh towards rental expenses called for the necessary details and asked the assessee to j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erivatives etc., it needs to meet with the investors regularly and frequently which is most necessary for its business activities. Further, he submitted, the subject premise is actually used for this purpose, hence, the expenditure incurred has to be allowed as business expense. Without prejudice, the learned Authorised Representative submitted, even if the premise taken on lease by the assessee is used by the directors for the purpose of their residence, the rental expenditure can be allowed as business expense since the said premise is also used by the directors for official work of the company. In support of such contention, he relied upon the following decisions: i) ACIT v/s Stuish Capital Service Pvt. Ltd., ITA no.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y applies to assessee s case. Accordingly, we allow assessee s claim of depreciation. This ground is allowed. 8. In ground no.2, the assessee has challenge disallowance of interest expenditure of ₹ 1,00,07,470. 9. Brief facts are, during the assessment proceedings, the Assessing Officer on the basis of AIR information called upon the assessee to reconcile the interest income earned by it during the year. From the details furnished, the Assessing Officer found that as against interest income earned during the year amounting to ₹ 1,57,55,088. The assessee had claimed interest expenditure on pro rata basis. On further query from the Assessing Officer, the assessee submitted that it had incurred int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pro rata basis on the investment made in NCDs. Thus, he submitted, there being a nexus between interest expenditure and interest income, it should be allowed. 11. The learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 12. We have considered rival submissions and perused the material on record. The short issue arising for consideration is, whether the interest expenditure incurred by the assessee is in relation to interest income earned during the year so as to allow it as deduction under section 57(iii) of the Act. It is the specific contention of the assessee that the borrowed funds on which the assessee has paid interest w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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