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2023 (3) TMI 469 - AT - Income TaxDeduction u/s 57(iii) - interest expenses on the borrowed funds which was diverting the interest bearing funds - assessee borrowed funds which have been invested in the firm M/s. Sweeto Apparels - HELD THAT:- It is pertinent to note that the mention of the assessee that the loan was taken for expansion of business from A.Y. 2007-08 onwards the fact remains that the position in A.Y. 2013-14 has remained similar in present AY 2015-16 as relates to capital investment in purchase of new shops. Tribunal in SHRI RASHMIN RAMNIKLAL VORA [2019 (6) TMI 1695 - ITAT AHMEDABAD] categorically mentioned that there was debit balance of assessee’s capital account in the partnership firm as the opening debit balance and closing debit balance was having a major difference as closing debit balance was much more higher. The assessee has paid net interest to the partnership firm but at the same time assessee has withdrawn more money from the partnership firm that actually invested in the partnership firm. Tribunal has also distinguished the factual aspect in assessee’s case and in case in CIT v/s. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME COURT] The facts are exactly identical to A.Y. 2013-14 and therefore, it is noticed that as per specific provision of Section 28(v) any interest, salary etc. earned by a partner from a partnership firm is taxable under the head profit and gains of business or profession and there is no question of categorizing it under the head income from other sources. Thus, the claim of the assessee for deduction u/s 57(iii) is not justifiable and has rightly been disallowed by the AO and the CIT(A). Thus, the appeal of the assessee is dismissed.
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