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2018 (5) TMI 1606 - AT - Income TaxDisallowance on interest payment claimed U/s 57 - Assessee has availed housing loan from State Bank of India - denial of claim as the assessee has claimed the same U/s 57 against the interest income received by him and not under the head of income from house property - Held that:- Before allowing the interest expenditure against the interest income, the burden is on the assessee to prove that the amount so borrowed has been actually and directly used for the purpose of advancing loan on which interest income has been earned. One to one link is required to be established in respect of utilization of interest bearing funds so borrowed. Merely because the loan was sanctioned for housing purpose, it cannot be said that the assessee cannot use it for advancing loans to others for earning interest. It may amount to violation of terms and conditions of the agreement so entered with the bank while sanctioning of the loan, but there is no contravention under the Income Tax Act for advancing such funds for earning interest income. There is no finding by the lower authorities that the interest earned out of advances were not out of interest bearing funds taken from bank. Restore this issue back to the file of the Assessing Officer for deciding afresh and the assessee is directed to demonstrate one to one use of borrowed funds for advancing loan on interest.
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