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2023 (11) TMI 244 - AT - Income TaxDeduction of interest in respect of the second loan u/s 24(b) - assessee purchased the property by utilising the unsecured loans from directors and shareholders - assessee had taken unsecured loans and the major portion of the same was utilised in repayment of the earlier loans - HELD THAT:- The unsecured loan taken from directors and shareholders was utilised for payment of consideration for the purchase of 2 shops along with 4 open car parking spaces together with equity shares and fully convertible debentures. We find that the lower authorities have not examined whether the term 'property’ u/s 24 also includes equity shares and fully convertible debentures, which were purchased by the assessee along with shops and open car parking spaces. Examination of the aforesaid aspect is necessary before determining whether the assessee is entitled to claim a deduction of interest paid on a loan taken for repayment of the earlier loan. Therefore, we deem it appropriate to remand the issue arising in ground No. 2, raised in assessee’s appeal, to the file of AO for de novo adjudication after examining the aforesaid aspect and thereafter in light of CBDT Circular No. 28 dated 20/08/1969. Ground No. 2 raised in assessee’s appeal is allowed for statistical purposes. Disallowing the interest expense - As argued property can be owned and enjoyed only by virtue of owning the shares and debentures as envisaged in the agreement as well as memorandum of association / article of association - whether cost of shares and debentures was part and parcel of the entire cost of property? - HELD THAT:- Shops no. 1 & 2 and 4 open car parking spaces along with B-class equity shares and fully convertible debentures of Ahura Chemical Products Pvt. Ltd. were sold to the assessee and consideration of Rs. 3,63,72,600 was paid by the assessee. However, before deciding on the validity of proportionate disallowance of the deduction of interest under section 24(b) of the Act, it is pertinent to analyse whether the term 'property’ u/s 24 also includes equity shares and fully convertible debentures, which were purchased by the assessee along with shops and open car parking spaces in the facts of the present case. Therefore, we deem it appropriate to remand the issue. Appeal by the assessee is partly allowed for statistical purposes.
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