TMI Blog2018 (10) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... interest incurred by the assessee was claimed by him in the preceding assessment years. Thus, there is direct nexus between earning of interest and expenditure of interest as per section 57 of the Act. Therefore, the assessee is entitled for netting of interest from the expenditure incurred. This principle is settled down in the case of ACG Associates Capsules (P) Ltd. vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA] that the net interest income should be included in the income of the assessee - decided in favour of assessee. - ITA No. 1640/Del/2015 - - - Dated:- 4-9-2018 - Shri Amit Shukla, Judicial Member And Shri L.P. Sahu, Accountant Member For the Assessee : Sh. Pradeep Dinodia Sh. R.K. Kapoor, C.A. For the Revenue : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 2. The brief facts of the case are that the assessee filed return on 22.07.2011 declaring total income of ₹ 59,25,690/-. Subsequently, the return was revised on 15.12.2011 and the returned income was same. The assessee-HUF is not engaged in any business or profession. Its main source of income is income from house property and income from other sources. The case was selected for scrutiny and statutory notices were issued. During the course of scrutiny proceedings, the AO observed that the assessee had invested a sum of ₹ 75,00,000/- in a future project being developed by M/s. Ansal Properties Infrastructure Ltd. in October, 2008. The said investment was made out of the loan taken in the name of co-parcener Mr. Alok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and there is no nexus between the expenditure claimed to have been incurred and the income said to be earned by the assessee. Therefore, the reasons and reply submitted by the assessee was not accepted and the AO disallowed the interest paid to the co-parcener to the extent of ₹ 20,71,233/- earned by the assessee and the added the same to the income of the assessee u/s. 56 of the IT Act. Feeling aggrieved from the order of the AO, the assessee appealed before the ld. CIT(A) and the ld. CIT(A) also confirmed the action of the AO. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee submitted a written synopsis before us, the relevant part of which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) are also discussed in these two judgments. Therefore, the only question that is required to be decided by the Hon ble ITAT is as to whether the assessee is eligible to claim deduction against the income earned, offered to tax under the head income from other sources upon these facts or not? The first judgment relied upon by the Ld. Assessing Officer / CIT(A) is that of Smt. Virmati Ramkrishna vs. CIT 131 ITR 659 (Gujarat High Court). There were two issues involved. The first issue was the proportionate amount of interest on the loan which was admittedly taken for meeting the obligations of personal nature was disallowed. In other words, the interest paid on the funds borrowed for the purpose of making investments was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) that income of every kind which is not chargeable to tax under any of the heads specified in section 14, items A to E, shall be chargeable to tax under the head Income from other sources and sub-section (2) includes in such income various items, one of which is dividends . Dividend on shares is thus income chargeable under the head Income from other sources . Section 57 provides for certain deductions to be made in computing the income chargeable under the head Income from other sources and one of such deductions is that set out in clause (iii), which reads as follows: The expenditure to be deductible under section 57(iii) must be laid out or expended wholly and exclusively for the purpose of making earning such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities have done good reasoned order and it does not call for any interference. The assessee has received interest and paid interest and there is no direct nexus for payment of interest. 5. After hearing both the sides and perusing the entire materials available on record, we observe that the assessee has taken loan through coparcener of the HUF of ₹ 78,00,000/-. On going through the loan sanction documents, we find that the nature of loan sanction by ICICI Bank is home equity (residential), which is on paper book page 36 to 38 and credited in the bank account of Alok B. Shriram in October, 2003. Further on 10.10.2007, a cheque bearing No. 70550 has been paid to the M/s. Ansal Properties Infrastructure Ltd. of ₹ 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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