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2022 (7) TMI 1220 - AT - Income TaxDisallowance of interest expenses claimed u/s.57 - entitlement of the assessee towards deduction of interest paid on borrowed funds u/s.57(iii) - nexus between the interest bearing funds raised by the assessee and the interest bearing amounts given - HELD THAT:- Dynasty Tradelink Pvt. Ltd - As interest bearing amounts raised by the assessee from M/s. Dynasty Tradelink Pvt. Ltd. had been wholly and exclusively advanced on interest to GDR Educational Society, therefore, the interest expenditure so incurred on the interest bearing funds was rightly claimed by the assessee as a deduction u/s. 57(iii) of the Act. Our aforesaid view is fortified by the judgment of the Hon’ble Apex Court in the case of Commissioner of Income Tax Vs. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME COURT] - Thus taking cognizance of the fact that an inextricable nexus between the interest bearing funds raised by the assessee from M/s Dynasty Tradelink Pvt. Ltd. and the interest bearing amounts given to GDR Educational Society is proved to the hilt, therefore, set-aside the order of the CIT(Appeals) and vacate the disallowance of the assessee’s claim for deduction under Sec. 57(iii) of the interest paid to M/s Dynasty Tradelink Pvt. Ltd. Rajni Rungta - As we find substance in the claim of the AR as regards the allowability of the assessee’s claim for deduction of the interest expenditure on the old loan of Smt. Rajani Rungta which was advanced as an interest bearing loan/advance for earning of interest income. Our aforesaid conviction is supported by the fact that the assessee’s claim for deduction of interest paid on the loan raised from the aforesaid person, viz. Smt. Rajani Rungta, as was raised by him in his return of income for the immediately preceding year, i.e AY 2012-13, had not been dislodged by the department. Nothing to the contrary has been brought to our notice by the ld. DR to rebut the aforesaid factual position as had been canvassed by the ld. AR before us. As the fact situation qua the issue in hand during the year under consideration remains the same as was there in the immediately preceding year, therefore, going by the principle of consistency we find no reason to take a different view, and thus, allow the assessee’s claim for deduction of interest on the aforesaid loan - Decided in favour of assessee.
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