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2012 (11) TMI 658 - AT - Income TaxIncome from other sources- nexus between income and expenditure - Liquidator’s Account - held that:- there was no accrual of interest liability - though “mercantile system” of accounting was adopted by the assessee. - the assessee has to prove the basis on which the interest expenditure of Rs.34.80 lacs was claimed. - A.O. is hereby directed to proceed accordingly as per law. - matter remanded back. Addition of interest income under the head rent income - held that:- First of all, Assessing Officer has to verify the exact nature of the earning of an income and then it is suggested to verify the nature of expenditure having any nexus with the earning of rental income. Only that portion of the expenditure which has connection with the earning of rental income is therefore an admissible deduction subject to the ceiling or limitation prescribed u/s. 23 & 24 of the I.T.Act. - matter remanded back for fresh decision.
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