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2019 (11) TMI 802 - AT - Income TaxClaim of deduction of the interest paid to DHFL and its associate concern on such borrowed funds which were invested with its associate concerns under Sec. 57(iii) - HELD THAT:- As long as it is established that the ‘Interest paid’ by the assessee on the loans raised from DHFL as per the mandate of Sec. 57(iii) was an expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning of the ‘Interest income’ from the associate concerns to whom interest bearing loans were given, then such ‘Interest paid’ would be eligible for deduction against the ‘Interest received’ by the assessee company. As the factual position as to whether the assessee satisfies the requisite conditions envisaged in Sec. 57(iii), therein making it eligible to claim deduction of the ‘Interest paid’ on the loans raised from to DHFL against the ‘Interest income’ received from the associate concerns to whom interest bearing loans were given cannot be safely gathered from the records before us, and would require verification, therefore, the matter in all fairness is restored to the file of the A.O - A.O shall in the course of the ‘set aside’ proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate its claim as regards its eligibility towards claim deduction under Sec. 57(iii) of the Act Entitlement of the assessee towards claim of deduction of ‘interest paid’ on the loan raised from its associate concern - HELD THAT:- A.R has filed before us a ‘Chart’, wherein it is claimed that the interest bearing loan received from M/s Skylark Buildcom Private Limited was advanced by way of interest bearing loans to its associate concerns during the year under consideration. As the claim of the assessee requires to be verified in the backdrop of the facts projected in the ‘Chart’ filed by the assessee before us, therefore, in all fairness we restore the matter to the file of the A.O. The A.O is directed to verify the veracity of the claim of the assessee that the amount received by it as interest bearing loans from M/s Skylark Buildcom Private Limited was utilised for providing interest bearing advances to its associate concerns. In case the aforesaid claim of the assessee is found to be in order and as per the mandate of Sec. 57(iii), then the A.O shall allow deduction of the ‘Interest paid’ by the assessee to M/s Skylark Buildcom Private Limited against the correlating ‘Interest income’ received by it from its associate concerns Claim of expenses viz. other expenses and amortization expenses against the ‘Interest received’ - HELD THAT:- As observed by us hereinabove, as the said expenses had not been incurred by the assessee for earning of ‘Interest income’, therefore, the same would not fall within the realm of the deductions envisaged in Sec. 57(iii) of the Act. Accordingly, finding no infirmity in the order of the CIT(A), we uphold the disallowance of the aforesaid expenses. Resultantly, in terms of our aforesaid observations the matter is restored to the file of the A.O. As observed by us hereinabove, the A.O shall in the course of the ‘set aside’ proceedings, after making necessary verifications, as he may deem fit,
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