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2023 (2) TMI 707 - AT - Income TaxDisallowance u/s 57 - disallowing of interest paid to bank which has been claimed by assessee against the income from other sources - principle consistency in earlier assessment years - AO while completing the assessment denied the claim for set off of interest paid by the assessee to banks/financial institutions against the income earned by the assessee from various companies on the ground that the assessee has not expanded the interest expenditure for earning interest income - CIT(A) sustained the stand of the AO observing that on perusal of the loan statements it is noticed that the loans have been granted either for purchase of home or for development of land - HELD THAT:- The principle accepted by the Revenue for the earlier four assessment years and three subsequent assessment years to the assessment year under consideration was that the assessee has been taking loans from the banks and financial institutions and the same were lent to various other companies for earning interest income and the claim for set off of interest paid to banks/financial institutions was allowed against interest earned by the assessee u/s 57 - Since the Revenue was accepted the principle consistency in earlier assessment years and also in subsequent assessment years there is no justification and deviating from the said principle only for the assessment year under consideration i.e. AY 2015-16. The Hon’ble Delhi High Court in the case of Vodafone South Ltd. 2015 (10) TMI 22 - DELHI HIGH COURT] held that where assessee having availed of loan from HSBC advanced said amount to its holding company there was a direct nexus between earning of interest on loan advanced by assessee to its holding company and payment of interest to HSBC. The assessee’s claim for netting off of interest in terms of Section 57(iii) of the Act was in order. Ratio of the decision applies to the facts of the case. We delete the disallowance made u/s 57 of the Act. Grounds raised by the assessee are allowed.
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