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TMI Blog2016 (12) TMI 1879X X X X Extracts X X X X X X X X Extracts X X X X ..... e's appeal 2. The first issue raised by the assessee in its appeal is with regard to confirming the disallowance u/s.36(1)(viii) of the Act in respect of the interest on mortgaged back security of Rs. 41,72,737/- and interest from loans advanced to deposits holders of Rs. 1,22,963/-. 3. The facts of the issue are that the assessee claimed deduction u/s.36(1)(viii) of the Act in respect of interest on mortgaged back security of Rs. 41,72,737/- and interest from loans advanced to deposit holders of Rs. 1,22,963/- was rejected by the lower authorities on the reason that it was not mandatory investment as required by any statutory requirements by carrying on business by providing loans and housing finances. According to AO, these incomes fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l fee from insurance companies and other income. 7. After hearing both the parties, we are of the opinion that this was already decided by this Tribunal in the case of M/s. Sundaram Home Finance Ltd., Vs. ACIT in ITA Nos.27 &28/Mds./2008 for assessment years 2003-04 & 2004-05 vide order dated 14.08.2008 wherein held in para -11 as follows: "getting properties and persons insured is not a mandatory requirement for carrying on the business of providing long term housing finance. Therefore, the income received by way of commission has no direct nexus or its not incidental to the long term housing finance. Accordingly, this issue was decided against the assessee." 7.1 In view of the Order of above Tribunal cited supra, we upheld the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that deduction of interest income on loans attributable for the purchase of undivided share of land while purchasing a house because s.36(1)(viii) itself makes a mention of purchase of a house. Purchase of a house is not complete without the purchase of undivided share of land. Hence, the assessee company is allowed deduction u/s.36(1)(viii) in respect of home loans. However, loan given for the purchase of land cannot be equated with the loan given for purchase of a house or construction of a house. Therefore, the AO disallowed the income earned on loans given for the purchase of lands u/s.36(1)(viii) of the Act. On appeal, the Ld. CIT(A) confirmed the order of AO. Aggrieved by the order of lower authorities, the assessee is in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 in ITA Nos.27 & 28/Mds./2008 cited supra wherein held that:- "4. As regards the first point regarding investment for maintaining SLR, the ld. A.R has contended before us that the interest received on securities held by the assessee as statutory liquidity reserve (SLR) was earned in the course of carrying on the business of long term finance as referred in Sec. 36(1)(viii) of the Act. He has further submitted that NHB the regulatory authority governing the assessee requires that the assessee has to maintain the statutory liquidity reserve in specified securities and its non-compliance would debar the assessee from carrying on business of housing finance. Thus, he has contended that the income derived from the investment to mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has made certain investment in Govt. securities, fixed deposits and NHB Bonds to maintain the statutory liquidity reserve as required by the National Housing Bank Act, 1987 and consequently the assesee has earned income o these Investments. The assesee claimed said interest income on these investments under section 36(1)(viii) income derived from business for providing long term housing finance. The Income-tax Authorities disallowed the said deduction on the ground that the interest income earned by the assessee is not directly derived from loan from housing finance. It Is undisputed fact that the Investment made, by the assessee is strictly as per the statutory requirement of NHB Act and without compliance of this requirement the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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