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2016 (9) TMI 1322 - AT - Income TaxInterest income paid on a loan taken from HDFC Bank for acquisition of controlling interest - allowable as a deduction u/s 57(1)(iii) or u/s 36(1)(iii) - Held that:- We have to necessarily to uphold the claim of the assessee for deduction of interest paid on loan borrowed to acquire controlling interest in M/s Galabon Hotels P.Ltd. This should be allowed u/s 36(1)(iii) of the Act. The finding of the Ld.CIT(A) that the assessee is not in the business of purchasing hotels and hence he does not have any business, is not correct. The contentions of the assessee that, he is in the business of real estate and has controlling interest in a number of companies and that if the Ld.CIT(A)’s factual finding is that the assessee acquired shares in M/s Galabon Hotels Pvt.Ltd. for the purpose of acquiring controlling interest in the property owned by this Hotel in Safdarjung Enclave, then also, as this is the business of the assessee, deduction should be allowed u/s 36(1)(iii) has to be accepted. We agree with these submissions. We also find that the A.O. in the A.Y. 2012-13 in a scrutiny assessment allowed the same claim of the assessee for deduction of interest u/s 36(1)(iii) of the Act. Thus even on the principle of consistency, this claim of the assessee has to be allowed. In view of the above discussion we direct the A.O. to allow the claim of the assessee for deduction u/s 36(1)(iii) of the Act. - Decided in favour of assessee.
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