TMI Blog2018 (5) TMI 1606X X X X Extracts X X X X X X X X Extracts X X X X ..... s no finding by the lower authorities that the interest earned out of advances were not out of interest bearing funds taken from bank. Restore this issue back to the file of the Assessing Officer for deciding afresh and the assessee is directed to demonstrate one to one use of borrowed funds for advancing loan on interest. - ITA No. 498/Jodh/2017, ITA No. 499/Jodh/2017 And ITA No. 500/Jodh/2017 - - - Dated:- 25-5-2018 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Sh. Ravinder Mittal DCIT ORDER PER: R.C. SHARMA, AM These are the appeals filed by the di fferent assessees against the separate orders of the ld. CIT(A) Ajmer dated 05/10/2017 for the A.Y. 2013-14 in the matter of order u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as the Act , for short]. 2. In al l these appeals, a common issue has been taken, therefore, all the appeals are being heard together and the Bench decided to dispose off all these appeals by a consolidated order. 3. At the time of hearing, none appeared on behal f of the assessee. Even though, the assessee filed adjournment peti tion but no body was there to prosec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough record maintained by the assessee as well from bank statement but having of predetermined views the Ld. A.O.to making the beyond fact allegation upon the assessee here to added the amount of ₹ 695008/- to disallowing the deduction claimed U/S 57 is absolutely illegal, unwarranted and beyond the facts. That during the course of hearing of the case in brief and detailed the assessee already given the proper explanation supporting with corroborative evidences, bank statement with home loan account with, letter dated 12.01.2015. In regard of justification / allowability of interest payment of ₹ 695008/- to State Bank of India, commercial Br -Bhilwara house loan which claimed as deduction U/S 57 of the Income Tax Act 1961 under the head of Income from other sources which covered and followed in respect of expenditure laid out and expended wholly and exclusively for the purpose of making and earning of any income specially in our case earning and receiving of interest income. And further we submit your honor according to showing the nature and transferring of funds from disbursement of bank loan from initial stage of loan sanction letter we have well p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Vimati Ramakrishana V/s CIT (1981)131 ITR 659 has observed in respect of deduction of an expenditure U/S 57 cited in order to decide whether and expenditure is a permissible deduction U/S 57, the nature of the expenditure must be examined secondly the nature must not be in the nature of capital expenditure or personal expenses of the assessee and third the expenditure must have been laid out or expended wholly and exclusively for the purpose of earning Income from other Sources and also decided that the purpose of making or earning such income must be the sole purpose for which the expenditure must have been incurred. In fact in our case the nexus of transaction for earning of income against expenditure we have well proved through documentary evidences and channel of bank statement in respect to transferring the funds from loan account to another persons and parties so there no logic to give the freedom to anybody for making of any type of addition in any head on the basis of presumption. Further we also submit your owner in respect of any transaction and connection between the expenditure and earning of income need not be direct and it may be indire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceedings which here to well accepted by the A.O. regarding investment made in construction of wholly buildup of residential house to incurring and withdrawing the further amount of ₹ 1086177/- in the year under review and proved the same source of investment since initial stage till to the completion of house construction through the record maintained and in support thereof in regard to showing the total amount of construction expenses till to the year ended on 1.03.2013 amount of ₹ 7654416/- spent specially there the balance sheet already given during the proceeding so the allegation of the A. O regarding Valuation report does not contain the cost for some essential construction , things etc. and mentioned easily the entire loan taken from SBI, even more than this amount and further mentioned not a single rupee must be available with the assessee for giving the loans to the other parties . We here to not agree with the views of own story and personal opinion made by the A.O. and strongly raised the objection about the whole scenario and facts to showing the capital, assets and liabilities only of home loan and other investment and advances where each a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich shown in construction on house ₹ 7654416/- the spent amount and on other way there the capital balance comes ₹ 8917118/- at the close of the year in the name of the assessee appellant against there in the assets side shown the figure of amount ₹ 5710284/- in the title head of Loans and advances hence there nexus of transactions well linked as direct so we submit your honor the assessee appellant rightly claimed the deduction of expenditure U/S 57 on other side also entitled to get the deduction U/S 24 under the head of income from house property. Point No 4 In this case there the assessee has taken the home loan since beginning of loan sanction letter and opening of bank loan account as well of saving bank account jointly as well as personal account and directly disbursed in same time to earning of interest and utilized for given as loans and advances, in this regard the direct nexus of transactions already well proved during the assessment as well of appellate proceeding in last year so there no question arises for establishment of source of funds given on loan to other parties here to prove there for the primary condition for deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans to others for earning interest. It may amount to violation of terms and conditions of the agreement so entered with the bank while sanctioning of the loan, but there is no contravention under the Income Tax Act for advancing such funds for earning interest income. However, there is no finding by the lower authorities that the interest earned out of advances were not out of interest bearing funds taken from bank. In the interest of justice and fair play, I restore this issue back to the file of the Assessing Officer for deciding afresh and the assessee is directed to demonstrate one to one use of borrowed funds for advancing loan on interest. I direct the Assessing Officer accordingly. 11. I also observe that in case of failure on the part of assessee to establish one to one relation between the amount of loan availed from bank and advance given by the assessee out of such borrowed funds for earning interest, the interest so paid is to be allowed against the income under the head income from other sources as per provisions of section 24 of the Act. I direct the Assessing Officer accordingly. 12. The facts and circumstances in the cases of ITA No. 499 500/Jodh/2017 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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