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TMI Blog2023 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... erable credit balance (own funds) and there is also sizeable balance shown under the head Span Margin in the asset side which substantiates the claim that there is no one to one match between the source and the investments. The claim of the assessee that the amount borrowed from related parties has been used for investment in FD as well as business purpose has merits. Be that as may be for the purpose of claiming deduction under section 57, it is important to establish that the expenditure (not being in the nature of capital expenditure) is laid out or expended wholly and exclusively for the purpose of making or earning such income. In assessee's case the assessing officer has not considered the movement in the loan account details submitted by the assessee and also has not considered the fresh FDs and renewal of FDs before concluding that the entire claim is not allowable u/s 57. Alternate plea of the assessee that the interest expenditure if disallowed u/s 57 should be allowed as business expenditure for the reason that the FDs are kept for business purpose has also not been considered by the lower authorities - In view of these discussions we deem it fit to remit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red loans taken and its nexus and usage for business, details of interest paid, loan confirmation, etc. The assessee furnished the following details with regard to the unsecured loans before the Assessing Officer. A.Y. 2017-18 DATE PARTICULARS AMOUNT DATE AMOUNT PARTICULARS 21-03-2014 FD WITH KOTAK MAHINDRA BANK 5,25,00,000.00 21-03-2014 2,72,00,000.00 LOAN TAKEN FROM ANKIT NISAR 21-03-2014 2,72,00,000.00 LOAN TAKEN FROM ANKIT NISAR 5,44,00,000.00 INTEREST RS. 47,25,000 @9% p.a. ON 5,25,00,000 21-04-2015 FD WITH KOTAK MAHINDRA BANK MATURED -5,25,00,000.00 07-05-2016 FD WITH HDFC BANK 1,90,00,000.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 1. 07.12.2018 Kotam Bank 4311801493 9900000 Renewal 6.6 2 07.12.2016 Kotak Bank 4311801509 9900000 Renewal 6.6 3 07.12.2016 Kotak Bank 4311801509 9900000 Renewal 6.6 4 07.12.2016 Kotak Bank 4311801516 9900000 Renewal 6.6 5 06.3.2017 HDFC Bank 503001874-8686 9900000 Renewal 6.75 6 07.03.2017 HDFC Bank 50300187477431 9900000 Renewal 6.75 7 19.03.2018 HDFC BANK 15000000 - 7.45 TOTAL 7,44,00,000 5. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess funds were placed in FD as lien for the business transactions. The assessee has offered the interest income separately under the head Income from other sources and restricted the claim of interest expenses against the said income to the extent of income offered under section 57 of the Act. The Ld.AR, therefore, submitted that the assessee had not claimed more than the income offered to tax under Income from other sources , i.e. income earned at 6.25% and the expenses restricted to the same percentage. Therefore, it is argued by the Ld.AR that no disallowance under section 57 is warranted. The Ld.AR also drew our attention to funds flow wherein the money received as loan from related parties have been used for keeping it in FD from where interest income is earned and submitted that this fact has been clearly explained to the Assessing Officer during the course of assessment. The Ld.AR further submitted that all the unsecured loans are not received during the year and in earlier years, no disallowance is made by the revenue. It is submitted that since the assessee has utilized the money borrowed both for business purpose as well as to keep in FD, the assessee could not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out or expended wholly and exclusively for the purpose of making or earning such income. In assessee's case the assessing officer has not considered the movement in the loan account details submitted by the assessee and also has not considered the fresh FDs and renewal of FDs before concluding that the entire claim is not allowable under section 57. The alternate plea of the assessee that the interest expenditure if disallowed under section 57 should be allowed as business expenditure for the reason that the FDs are kept for business purpose has also not been considered by the lower authorities. In view of these discussions we deem it fit to remit the issue back to the assessing officer for a de novo consideration. The assessing officer is directed to consider the movement in the FD account and the loan account to understand the nexus and also to consider the alternate claim of interest as business expenditure based on the facts and evidences that may be submitted by the assessee. Needless to say that the assessee be given a reasonable opportunity of being heard. 10. The facts are identical for AY 2018-19 also and therefore we remit the issue for AY 2018-19 also back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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