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2023 (2) TMI 790 - ITAT RAJKOTRevision u/s 263 - wrong claim of deduction made u/s 43B - as per CIT with respect to the claim of interest expenses assessee claimed deduction for bank interest paid relating to another bank RCC Bank which had been paid through assessee’s wife account - HELD THAT:- We find that the assessee had duly substantiated his claim of interest expenses under section 43B on payment basis. The ld.Pr.CIT has, except for stating that the payment has been made by his wife, and therefore, is not allowable, has pointed out no other anomaly in the explanation of the assessee nor has he pointed out why despite all the facts, as narrated and substantiated by the assessee, the claim was still disallowable under section 43B of the Act. The fact that payment made by his wife was on account of repayment of loan given by him to his wife was duly demonstrated with evidence to the Ld.PCIT. Even otherwise how the fact of payment of interest by any other person other than the assessee affects claim of expenses on payment basis as per section 43B of the Act has not been brought out by the Ld.PCIT. Therefore, we agree with the ld.counsel for the assessee that there is no error in the order of the AO allowing the assessee’s claim of interest under section 43B Claim of interest u/s 36(1)(iii) - as per CIT there was a huge negative capital balance account of the assessee and on that basis he held that proportionate loans were utilized towards the negative capital account which tantamounted to utilization of the same for non business purposes and accordingly interest expenses relating to the same was not allowable - As noted that the assessee had explained to the ld.Pr.CIT that the loans appearing in his books of accounts were very old loans since 1999 and from RNSB and RCC Bank, and therefore, they could not be attributed to have been utilized for non-business purpose in the impugned year. Despite these explanations given by the assessee to the ld.Pr.CIT, the ld.Pr.CIT being aware of all these facts, he has still gone ahead to hold that interest expenses claimed by the assessee not allowable under section 36(1)(iii) - We are not in agreement with the ld.Pr.CIT on this aspect also, noting that the assessee has duly explained that there was no nexus between the loans and negative capital balance in the impugned year, the loans being very old pertaining to 1999. We agree with the ld.counsel for the assessee that there was no error in the order of the AO vis-à-vis the allowability of claim of interest expenses under section 36(1)(iii) of the Act also. Thus order of the ld.Pr.CIT passed u/s 263 on the above two issues of disallowance is not sustainable in law, and there was no error in the order of the AO allowing both these claim to the assessee. Decided in favour of assessee.
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