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2019 (11) TMI 1076 - ITAT DELHINet interest income for deduction u/s. 80 IA - Allowable expenditure u/s. 57 (iii) - netting of off interest expenditure and interest income - HELD THAT:- We find merit in the arguments advanced by the assessee that such interest expenditure is an allowable expenditure u/s.57 (iii) even if the said interest income is considered as income from other sources by deviating from the stand of the department in the preceding as well as subsequent assessment years when such interest income has been treated as business income. A perusal of the order of CIT(A) shows that assessee had given the bifurcation of interest income on loans and advances to parties and the interest expenditure on such borrowings and has shown net interest income of ₹ 7,85,61,480/- on which no deduction u/s. 80 IA has been claimed. There is a direct nexus between the interest income of ₹ 23.96 lakhs and interest expenditure of ₹ 20.30 lakhs. We find the Hon’ble Delhi High Court in the case of Vodafone South limited Vs. CIT [2015 (10) TMI 22 - DELHI HIGH COURT] after considering the decision of Tuticorin Alkai Chemicals and Fertilizers Ltd. [2015 (10) TMI 22 - DELHI HIGH COURT] has held that where assessee having availed of loan from HSBC, advanced said amount to its holding company, i.e. SCL and since there was a direct nexus between earning of interest on loan advanced by assessee to SCL and payment of interest to HSBC on loan drawn in terms of sanction letter, assessee’s claim for netting off of interest in terms of section 57 (iii) was to be allowed. The various other decisions relied by the ld. Counsel for the assessee also support his case that such interest expenditure has to be allowed as deduction from such interest income if such interest income is treated as income from other sources. We, therefore, hold that the assessee is entitled to netting of off interest expenditure and interest income. Even if the proposition laid down by the CIT(A) that principle of rejudicata is not applicable to the income tax proceedings is accepted, however, the rule of consistency has to be followed. Since the revenue in the preceding as well as subsequent years has accepted such netting off of interest expenses from such interest income, therefore, on this score also the assessee is entitled to netting off. We, therefore, set aside the order of the CIT(A) and allow the grounds on this issue.
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