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TMI Blog1986 (1) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... yond doubt. Hence the Department has come in appeal. 2. In fact, the assessee has claimed the deduction of interest of Rs. 38,242 on the ground that he paid the said interest towards loans raised for constructing the house property. Details of the said payment of interest are as follows: I.O.B. a/c Rs. 6,100 I.O.B. C/C a/c Rs. 1,119 Bank of Maharashtra loan a/c Rs. 21,001 N.U. Tawale Rs. 750 Trimurti Bank Rs. 9,270 . Rs. 38,240 3. The assessee owns a commercial building named Laxmi Chambers on Laxmi Road in Pune. The assessee has worked out the income from this property, i.e. Laxmi Chambers, and claimed deduction of interest. The assessee also received interest of Rs. 15,806. Details of the receipt of the interest by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecember, 1977 and the loan from Trimurti Co-op. Bank in February, 1979. These two loans were also second borrowings. 4. The assessee raised total loans of Rs. 3,27,075 in asst. yr. 1964-65. The cost of construction is Rs. 2,75,000. According to the ITO the three loans as described above are not the second borrowings and therefore, the assessee's claim of interest payment on the loans mentioned regarding, (1) I.O.B. C/C loan a/c, (2) Bank of Maharashtra loan a/c, and (3) Trimurti Co-op. Bank a/c, cannot be accepted. The ITO further held that the IOB C/C loan account and loan from N.U. Tawale are also neither original loans nor second borrowing and hence interest paid on these loans cannot be allowed. 5. It is the ITO's own version that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either by way of expenses or for running the assessee's profession. This process continued upto asst. yr. 1978-79 when fresh loan of Rs. 1,36,717 was obtained from the Bank of Maharashtra at a higher rate of interest and out of the said loan the assessee utilised an amount of Rs. 1,23,000 in the repayment of the old loans. The balance was used for the purpose of carrying on profession. The same position continued till asst. yr. 1980-81, i.e. the assessment year under appeal. 9. The assessee borrowed a sum of Rs. 1,03,271 and used the same for the repayment of old loans of private parties. Thus it becomes clear that the assessee has utilised the major part of the subsequent loans for repayment of the old loans and a minor part for running h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of interest of Rs. 22,436 and to allow balance of payment of interest as deduction from professional income. In our view, the view taken by the AAC does not appear improper or unreasonable. However, we wish to make the point clear in the sense that the interest on the amount of Rs. 13,717 be computed and allowed against professional income. We do not desire to interfere with the finding of the AAC in regard to the payment of interest of Rs. 22,436 held by him as allowable deduction. 11. The assessee in support of his contention to allow payment of interest by way of deduction against the property income has placed reliance on the decision of the Andhra Pradesh High Court in the case of CIT, A.P. vs. Gopikrishna Muralidhar (1963) 47 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kar's main contention is that the assessee has failed to establish that he has utilised subsequent loans for repayment of the old loans and there is no nexus between the subsequent loans and the repayment of the old loans. Shri Walvekar's contention was that it was for the assessee to furnish the particulars regarding the fresh loan and the repayment of the old loan and he has failed and therefore, the ITO has rightly refused to allow deduction of payment of interest. 13. The assessee in his rejoinder has contended that he has purchased the property by raising loans from the Bank, if his nil income is taken into account, than his claim to allow repayment of interest stands on a right footing. The assessee has also relied upon the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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