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TMI Blog2022 (7) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... e complete facts which would prove to the hilt the existence of an inextricable nexus between the aforesaid interest bearing loans and the interest generating advances is discernible from the records, nor any such claim of deduction of interest is found to have been raised by the assessee in its return of income for the immediately preceding year i.e AY 2012-13. Be that as it may, as the issue as regards the allowability of the assessee s claim for deduction under Sec. 57(iii) of the interest paid on the loans raised from the aforementioned three parties cannot be adjudicated in the absence of complete set of facts before us, therefore, in all fairness we restore the matter to the file of the A.O with a direction to re-adjudicate the same in the backdrop of our aforesaid observations. In case the assessee in the course of the set-aside proceedings is able to substantiate that the interest bearing loans raised by him from the aforementioned three parties, viz. (i) Hill Queen Investment Pvt. Ltd.; (ii) Sonal Kumar Rungta; and (iii) Tanishq Export Pvt. Ltd. were advanced for the purpose of earning of interest income in question, then, the A.O shall allow his claim for deduction qua th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) is unjustified, unwarranted and uncalled for. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the assessed income at Rs.29,72,185/- as assessed by the A.O instead of Rs.23,95,877/- (before claiming deduction u/s.57 of Rs.29,72,185/-). The said assessed income is not correct and is unjustified, unwarranted and uncalled for. 3. That the appellant reserves the right to add, amend or modify any grounds of appeal at the time of hearing. 2. Succinctly stated, the assessee who is a promoter director of GDR Rungta group of institutions had filed his return of income for AY 2013-14 on 28.03.2013, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee as against his interest income of Rs.10,75,877/- had claimed deduction u/s.57 of the Act of Rs.29,72,185/- towards interest paid on unsecured loans. It was observed by the A.O that the assessee after claiming the aforesaid deduction had shown net interest of (-) Rs. 18,96,308/. On being queried as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 451645 Interest paid to Tanishq Export Pvt. Ltd. 70818 Interest from GDR Education society 205586 Interest paid to Sonal Kumar Rungta 81643 Savings bank interest 13268 Interest paid to OBC ( Temporary OD) 110176 Total 2972185 Total 1075877 On a perusal of the aforesaid details, we find that the assessee had claimed deduction of interest paid of Rs.29,72,185/- as against the interest income of Rs.10,75,877/-. As such, the assessee had claimed payment of excess interest as against that received from the aforementioned parties. 8. Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not the interest paid by the assessee to the aforementioned 5 parties was rightly claimed as a deduction against the interest income that was received by him during the year under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.11.2012 Dynasty Tradelink Pvt. Ltd. 2000000 24.11.2012 GDR Educational Society 2000000 26.11.2012 Dynasty Tradelink Pvt. Ltd. 1900000 26.11.2012 GDR Educational Society 1900000 29.11.2012 Dynasty Tradelink Pvt. Ltd. 1000000 29.11.2012 GDR Educational Society 1000000 03.12.2012 Dynasty Tradelink Pvt. Ltd. 1000000 03.12.2012 GDR Educational Society 1000000 03.12.2012 Dynasty Tradelink Pvt. Ltd. 2500000 03.12.2012 GDR Educational Society 2500000 05.12.2012 Dynasty Tradelink Pvt. Ltd. 1000000 05.12.2012 GDR Educational Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2013 GDR Educational Society 500000 15.01.2013 Dynasty Tradelink Pvt. Ltd. 1600000 15.01.2013 GDR Educational Society 1600000 31.01.2013 Dynasty Tradelink Pvt. Ltd. 1600000 31.01.2013 GDR Educational Society 1600000 06.02.2013 Dynasty Tradelink Pvt. Ltd. 1000000 06.02.2013 GDR Educational Society 1000000 07.02.2013 Dynasty Tradelink Pvt. Ltd. 1500000 07.02.2013 GDR Educational Society 1500000 12.02.2013 Dynasty Tradelink Pvt. Ltd. 1165000 14.02.2013 Cash withdrawal 500000 Cash in hand as on 31.03.2013 14.02.2013 Dynasty Tradelink Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC), wherein, the Hon ble Apex Court while deliberating on the scope and domain of Section 57(iii) of the Act, had observed, that Section 57(iii) of the Act only requires that the expenditure must be laid out or expended wholly and exclusively for making or earning income and not that such income must have been earned. Also, a similar view had been taken by the Hon ble High Court of Punjab Haryana in the case of CIT Vs. Pankaj Munjal Family Trust, 326 ITR 286 (P H). It was observed by the Hon ble High Court that though the assessee before them had raised interest bearing funds at a higher rate of interest from its family concerns for making investments in lower interest yielding shares, no adverse inferences as regards allowability of the assessee s claim for deduction under Sec. 57(iii) of the Act was liable to be drawn on the said count. 10. In the backdrop of the aforesaid facts read with the settled position of law, we are of the considered view that as the assessee had raised interest bearing loans to the extent of Rs. 3,22,50,000/- (supra) from M/s. Dynasty Tradelink Pvt. Ltd. wholly and exclusively for the purpose of earning interest income on the loans/deposits given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said interest bearing loans and the interest generating advances is discernible from the records, nor any such claim of deduction of interest is found to have been raised by the assessee in its return of income for the immediately preceding year i.e AY 2012-13. Be that as it may, as the issue as regards the allowability of the assessee s claim for deduction under Sec. 57(iii) of the interest paid on the loans raised from the aforementioned three parties cannot be adjudicated in the absence of complete set of facts before us, therefore, in all fairness we restore the matter to the file of the A.O with a direction to re-adjudicate the same in the backdrop of our aforesaid observations. In case the assessee in the course of the set-aside proceedings is able to substantiate that the interest bearing loans raised by him from the aforementioned three parties, viz. (i) Hill Queen Investment Pvt. Ltd.; (ii) Sonal Kumar Rungta; and (iii) Tanishq Export Pvt. Ltd. were advanced for the purpose of earning of interest income in question, then, the A.O shall allow his claim for deduction qua the same under Sec. 57(iii) of the Act. C). OBC : Rs.1,10,176/- : (i) Mary Mithai : Rs.24,394/-; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid averments, it was submitted by the Ld. AR that as the claim of the assessee for deduction of interest expenditure in question was in order, therefore, the same did merit acceptance and was liable to be allowed. 14. After having given a thoughtful consideration to the contentions advanced by the Ld. Authorized representatives for both the parties qua the aforesaid issue in hand, we find substance in the claim of the ld. AR as regards the allowability of his claim for deduction of the interest expenditure on the old loans which were utilized for earning of interest income by advancing the same as interest bearing loans/deposits. Our aforesaid conviction is supported by the fact that the assessee s claim for deduction of interest paid on the loans raised from the aforesaid four parties in his return of income for the immediately preceding year, i.e, AY 2012-13 had been accepted by the department and had not been dislodged, Page 11 of APB. Nothing to the contrary has been brought to our notice by the ld. DR to rebut the aforesaid factual position as had been canvassed by the ld. AR before us. Considering the aforesaid facts, we are of the considered view, that as the fact si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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