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TMI Blog2018 (5) TMI 2061X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee have not represented before the Ld.CIT(A) by restoring the issue to the file of the Ld.CIT(A), it would not serve any purpose in so far as any evidence produced before the Ld.CIT(A) on this issue would have to be sent to the AO for his Remand Report - we are of the view that the issue in this appeal is liable to be restored to the file of the AO for re-adjudication. AO is to verify whether the loan has actually been taken from the holding company and whether the interest has been paid to such holding company. If the loan has been taken by the assessees from any source and the assessees have paid interest on such loans taken clearly, if the assessees have used such loans for the purpose of giving further loans then the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ought to have seen that the appellant had declared interest income under the head other sources and claimed the interest paid under section 57 of the Income Tax Act. The learned CIT(A) erred in law in disallowing the appellants claim of interest expenditure made under section 57 of the Income Tax Act. 3. The learned CIT(A) ought to have seen that as per section 57(iii) any expenditure which is not capital in nature and which is expended wholly and exclusively for the purpose of earning income from other sources shall be allowed as deduction. In the instant case the expenditure of interest is expended wholly and exclusively for the purpose of earning interest and is for the purpose of earning interest income therefore is allowable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture was laid out or expended wholly or exclusively for the purpose of making or earning the income. Consequently, the AO had brought to tax the interest expenditure claimed under the head income from other sources. It was submitted by the Ld.AR that the assessees are Pvt. Ltd. Companies and the Memorandum and Articles of Association of both the companies permitted the assessees to take loans as also to give loans. It was a submission that it is an undisputed fact that the assessees have taken the loans and have paid the interest thereon. The only dispute raised by the AO was whether the expenditure representing the interest payments on the loans taken were liable to be treated as the expenditure laid out or expended wholly or exclusively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r re-adjudication as the said facts had not been placed before the Ld.CIT(A). 8. We have considered the rival submissions. 9. A perusal of the order of the Ld.CIT(A) shows that though opportunities had been granted to the assessees, the assessees have not represented its case before the Ld.CIT(A). The reason for nonrepresentation before the Ld.CIT(A) has been clarified by the Ld.AR stating that the Managing Director of the assessees company was in substantial problems which had resulted in him not being able to give adequate attention. Considering the fact that all the details in respect of the issue have not been considered by the AO and the fact that the assessees have not represented before the Ld.CIT(A) by restoring the issue to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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