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2023 (10) TMI 619 - AT - Income TaxDisallowing part of interest expense claimed u/s 57 - assessee had interest income as well as interest expenditure and such transactions of income and expenditure were revealed by the assessee under the head income from other sources - HELD THAT:- Since the issue pertaining to the allowability of expenditure u/s.57(iii) was dealt with by the Co-ordinate Bench of the ITAT, Raipur [2022 (5) TMI 1585 - ITAT RAIPUR] and also the issue is squarely covered by the order of Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME COURT] wherein it is specifically held that how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting, and the interpretation of section 57(iii) cannot be different. The deduction of the expenditure cannot, in the circumstances, be held to be conditional upon the making or earning of the income. Since, in the present case there was income earned by the assessee by way of interest, however, the same was not equal to the percentage of interest in terms of interest expenditure incurred but the same could not be a reason to disqualify certain expenditure within the provision of Section 57(iii) when the Hon’ble Apex Court, in an deficient situation than in the present case, has held that the expenditure could not be denied merely because there was no income earned during the relevant A.Y. In such circumstances, we are of the considered view that expenditure incurred by the assessee, genuineness of which was not disputed by the A.O are allowable expenditure in terms of provisions of Section 57(iii), thus, addition made by the A.O and confirmed by the CIT(Appeals) are not sustainable. We set aside the order of CIT(A) and direct the A.O to delete the addition made u/s.57(iii) of the Act. Thus, grounds of appeal raised by the assessee are allowed in terms of our aforesaid observations.
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