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2016 (2) TMI 85 - ITAT DELHI

2016 (2) TMI 85 - ITAT DELHI - TMI - Deduction U/S 57 - deduction of of interest expenditure against interest income - nexus between borrowing of funds from the bank and interest income earned on the FDR - Held that:- CIT(A) has not applied his mind to decide the evidentiary value of the documents sought to be brought on record by the assessee rather acted as a post office to tow the line of Assessing Officer. When the assessee has specifically come up with the defense that the deduction claimed .....

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form FDR and interest paid on OD account claimed u/s 57 of the Act without declaring the agreement as false and frivolous document.

Without entering into the merits of the case, we are of the considered view that the file is required to be restored to Ld. CIT(A) for fresh adjudication by taking out into account the loan documents relied upon by the assessee. Needless to say that Ld. CIT(A) is require to provide adequate opportunity of being heard to the parties before passing fresh or .....

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A) XXVI, New Delhi qua the Assessment Year 2009-10 on the grounds inter alia that:- "1. That within the facts and circumstances of the case and the law on the point the learned Commissioner of Income tax (Appeals) - XXVI, New Delhi (learned CIT (A)) has erred in dismissing the appeal of the Appellant without providing adequate opportunity of being heard in the matter, and therefore the impugned Order is bad in law and deserves to be set aside. 2. That within the facts and circumstances of t .....

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earned on the FDR and also failed to appreciate that the intention of the Appellant was to take up activities in the nature of purchase and sale of properties, and therefore the impugned Order is erroneous and is bad in law and deserves to be set aside. 3.1 That within the facts and circumstances of the case and law on the point, the learned CIT (A) has erred in confirming disallowance of interest of ₹ 27,29,491.00 paid by the Appellant which was adjusted out of interest income earned by t .....

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rned ACIT) has erred in considering the purchase of property in the nature of residential house, and therefore, the impugned Order is erroneous and is bad in law and deserves to be set aside. 3.2 That within the facts and the circumstances of the case and the law on the point the learned CIT(A) has erred in not accepting the submissions of the Appellant that the payment of interest was an allowable deduction under section 36(1)(iii) of the Act and has further erred in relying on the explanations .....

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bad in law and deserves to be set aside. 3.3 That within the facts and the circumstances of the case and the law on the point the learned CIT (A) has erred in disallowing interest of ₹ 27,29,491.00 claimed as deduction under section 57 of the Act and ignoring the fact that payment of interest provided an arbitrage to the Appellant by way of setting off the same against higher amount of income earned by the Appellant, and that the rejection of the aforesaid argument of the Appellant is a s .....

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n made by the learned Assistant Commissioner of Income tax notwithstanding that in the aforesaid decision it was held " .... that borrowings against fixed deposits placed with a bank utilized for business purpose will allow the borrower to set-off the interest paid on borrowings against interest earned on fixed deposits, and that the interest paid on borrowings against fixed deposits utilized for purposes other than business will not allow the borrower to set-off the interest paid against i .....

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n the assessee and in response thereto Shri Rakesh Jain CA/ AR attended the proceedings and filed necessary details and documents. 3. The assessee claimed deduction U/S 57 of the LT. Act, 1961 to the tune of ₹ 27,29,491/- and on query, assessee filed the details of interest claimed and the assessee was show caused as to why the interest deduction and claimed u/s 57 of the Act amounting to ₹ 27,29,491/- shall not be allowed. Finding the explanation filed by the assessee not tenable an .....

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er contended that Ld. CIT(A) has arbitrarily decided the appeal without entertaining additional evidence ought to be brought on record by the assessee and consequently erred in confirming the disallowance of interest of ₹ 27,29,491/-. 6. On the other hand, Ld. D.R. relied upon the order passed by Ld. CIT(A). 7. We have heard both the authorized representatives and have perused the material on record in the light of the facts and circumstances of the case and orders of tax authorities below .....

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essee under Rule 46A of I. T. Rules, 1962 merely on the basis of remand report sent by Assessing Officer by recording following findings:- "8. I have considered the facts of the case, submissions of the appellant with regard to admission of additional evidence, remand report of the Assessing Officer, appellant's rejoinder. The Assessing Officer has rightly pointed out in his remand report that the "copies 'of agreement to sell" submitted as an additional evidence made it e .....

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