Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (5) TMI 1197 - AT - Income TaxClaim of interest expenses u/s 57(iii) in the light of the assessee’s claim of exemption u/s 54EC - assessee has sought to derive double benefit by claiming exemption u/s 54EC in respect of capital gains income and by simultaneously claiming deduction u/s 57(iii) in respect of the interest paid on loan which was taken to invest in 54EC bonds - HELD THAT:- We find that there is neither any dispute about the consideration for transfer of shares nor there is any dispute in respect to the fact that 15% amount of the sale consideration was held back by the purchaser and was disbursed only in subsequent years along with interest; and the assessee had offered it to tax too. Since capital gain is to be taxed on the accrual basis, in order, to meet the short fall (15% of balance sale consideration) the assessee had borrowed the loan and in the loan agreement with the bank it is specifically stated that loan taken was to be invested. We find that the loan was taken wholly and exclusively for the purchasing the Bonds. Expenditure on account of interest on loans has been incurred for acquiring the interest yielding bonds, which clearly establishes the nexus between the income earned and the expenditure incurred. It has been rightly noted by the CIT(A) that the interest income earned/ accrued on such bonds has been offered for tax as income from other sources and the expenditure incurred for earning such income is allowable u/s 57(iii) and therefore there is clear link and nexus between interest earned and interest paid and therefore the assessee will be eligible for the deduction of interest out of the interest earned on such investment. Therefore we find no infirmity in the order of the CIT(A), therefore we confirm the order passed by the CIT(A) and the appeal preferred by the revenue is dismissed.
|