TMI Blog2017 (11) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... re Hon'ble Delhi High Court qua the property in question and the property has also not been transferred in the name of assessee, the assessee will certainly get benefit of interest payment on the loan of ₹ 6,00,00,000/- u/s 57 (iii) of the Act as it is not a house property income as has been held by the AO. Rather it was invested in the commercial property made by the assessee to get assured return / interest from his investment of ₹ 6,00,00,000/-. Thus CIT (A) has rightly held that this income is to be treated as income from other sources and the interest paid by assessee to M/s. Reliance Capital Limited is to be allowed as expenditure incurred for earning the income u/s 57 (iii) of the Act. Moreover, when there was a catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan taken from Reliance Capital Ltd was for the purposes of earning income from other sources; (iii) Holding that the intention of the assessee was to earn assurance return given by the Omaxe Ltd and to purchase multiplex in the commercial space in Omaxe NRI city; (iv) Directing to allow the interest on loan under section 57(3) of the I T Act though the same is specifically allowable u/s 24(b) of the I T Act. (v) Holding that the interest on loan was a revenue expenditure and not a capital expenditure. (vi) Holding that the assessee had made an investment in commercial property ignoring the fact that the unit allotted to the assessee was a house property. (vii) Not applying the ratio of decision in the case of Tuticorin Alka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced that assessee has shown income from salary at ₹ 20,96,091 and ₹ 29,73,188/- and declared a loss of ₹ 4,45,838/- and ₹ 7,32,459/- under the head 'income from other sources' for AYs 2009-10 and 2010-11 respectively. Assessee has adjusted the interest to the tune of ₹ 40,80,835/- and ₹ 33,23,793 for AYs 2009-10 and 2010-11 respectively paid to Reliance Capital Limited in a housing loan and has adjusted the same against the income under the head 'income from other sources'. AO disallowed the interest of ₹ 4,45,838/- and ₹ 33,23,793/- for AYs 2009-10 and 2010-11 respectively paid to Reliance Capital Limited for the reason that the said loan was obtained for the purpose of acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal and arguments addressed by ld. Authorized Representatives of the parties to the appeal, the sole question arises for determination in this case is :- as to whether the interest expenditure incurred by the assessee on the loan availed of from M/s. Reliance Capital Limited is directly related with the interest income earned on advance made to M/s. Omaxe Limited should be allowed to be deducted from the said interest income u/s 57 (iii) of the Act? 9. Ld. CIT (A), by relying upon the judgment of Hon'ble Apex Court cited as CIT vs. Rajendra Prasad Moody - (1978) 115 ITR 519, held that the interest expenditure incurred by the assessee on the loan availed of from Reliance Capital Limited is directly related to interest income ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to M/s. Reliance Capital Limited is to be allowed as expenditure incurred for earning the income u/s 57 (iii) of the Act. Moreover, when there was a categoric understanding between the assessee and M/s. Reliance Capital Limited that the assessee will get assured return, the interest was being paid for the purpose of earning interest i.e. assured income from M/s. Omaxe Limited and acquisition of the property was incidental only. 11. Hon'ble Apex Court in case of CIT vs. Rajendra Prasad Moody (supra) while interpreting section 57 (iii) of the Act held as under :- The plain natural construction of the language of s. 57(iii) of the Income-tax Act, 1961 irresistibly leads to the conclusion that to bring a case within the sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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