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2018 (10) TMI 918 - AT - Income TaxDisallowing the deduction of Interest paid on overdraft facility claimed by the appellant from Interest earned on FDR u/s 57(iii) - Held that:- There is no dispute that the assessee purchased FD of ₹ 12 crores out of interest free loan from one trustee, namely, Dr [Mrs] Vimla Lal. There is no dispute that the assessee availed overdraft facility against the said FD and utilised the borrowing towards purchase of shares of a group company. In our considered opinion, the assessee had two options, viz., the assessee could have liquidated the FD and utilised the amount towards purchase of shares of group company and, secondly, the assessee could have taken over draft the FD and utilised the funds towards the purchase of shares of group company. The assessee opted for second option. The source of interest earning remained intact. In doing so, the assessee had to incur interest expenditure on overdraft. The source of income and application of income is same, i.e. FD. Therefore, in our considerate view, netting off of interest has to be allowed to the assessee. Our view is also fortified by the judgment in the case of ACG Associated Capsules [P] Ltd [2012 (2) TMI 101 - SUPREME COURT OF INDIA]. Ground No. 1 is accordingly allowed. Disallowance of short term capital loss - Held that:- It is true that the assessee accepted the shares of M/s Varun Industries Ltd as security against the loan given to Swati Rajesh Shah. It is equally true that the assessee has nothing to do with the profits /losses in the sale of shares of M/s Varun Industries Ltd. If the sale transactions would have resulted into gain, we are certain that the assessee would not have paid the tax on the gains on the plea that the gain belongs to Swati Rajesh Shah. By the same analogy, any loss on sale of shares belong to Swati Rajesh Shah and the assessee has been rightly denied claim of loss.
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