TMI Blog2018 (12) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee - the existence of an inextricable nexus between the incurring of the interest expenditure and earning of the interest income is a pre-requisite condition for allowability of the interest expenditure as a deduction under Sec. 57(iii) of the Act. We find that our aforesaid view stands fortified by the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Dr. V.P Gopinathan [2001 (2) TMI 10 - SUPREME COURT] - decided against assessee. Alternative claim of the assessee - as the interest expenditure was incurred on the funds borrowed for acquisition of a property, thus, the same would be entitled for deduction under Sec. 24(b) - Held that:- the interest expenditure incurred by the assessee on the loan raised by him, to the extent the same is relatable to the funds utilized by him towards purchase of his share of ownership in the residential property viz. Flat No. 201, Sea Goddess, Juhu, Mumbai, would be eligible for deduction under Sec. 24(b) of the Act. We thus, restore the matter to the file of the A.O, who shall after making necessary verifications allow the deduction of the interest expenditure under Sec. 24(b) of the Act to the assessee - decided in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come as required under Sec. 57(iii) of the Act, therefore, disallowed the claim of deduction of ₹ 37,84,593/- raised by the assessee. On the basis of the aforesaid deliberations the A.O assessed the income of the assessee at ₹ 76,13,200/- . 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions advanced by the assessee before him, was however not persuaded to subscribe to the same. Observing, that the interest expenditure of ₹ 37,84,593/- was not wholly and exclusively incurred by the assessee for earning of the interest income, the CIT(A) taking support of the judgments of the Hon‟ble High Court of Bombay in the case of Bai Bhuriben Lallubhai Vs. CIT (1956) 29 ITR 545 (Bom) and that of the Hon‟ble Supreme Court in the case of Vijaya Laxmi Sugar Mills Ltd. Vs. CIT (1991) 191 ITR 641 (SC), upheld the disallowance of the claim of deduction of the assessee under Sec. 57(iii) of the Act. The alternative contention of the assessee, that the interest expenditure incurred on the borrowed funds utilized for purchase of residential property would be entitled for deduction under Sec. 24(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity of FDR) was not to be allowed as a deduction under Sec. 57(iii) against the interest income earned on the FDR. As regards the alternative claim of the assessee, that the interest expenditure on the borrowed funds which were utilized for purchase of a residential property was allowable as a deduction under Sec. 24(b) of the Act, the ld. D.R relying on the orders of the lower authorities submitted that as the assessee had neither furnished the computation of the annual lettable value (for short ALV‟) of the said property, nor placed on record any document evidencing the fact that the property under consideration was ready for occupation, therefore, the said claim of the assessee was rightly rejected by the lower authorities. 6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the deductions allowed against the income chargeable under the head Income from other sources are circumscribed in Sec. 57 of the Act. Still further, in case of interest income earned by an assessee, only the expenditure (not being in the nature of a capital expenditure) laid out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. 7. We shall now advert to the alternative claim of the assessee that as the interest expenditure of ₹ 37,84,593/- was incurred on the funds borrowed for acquisition of a property, thus, the same would be entitled for deduction under Sec. 24(b) of the Act. We are of the considered view that as the assessee had claimed the aforesaid interest expenditure of ₹ 37,84,593/- as a deduction under Sec. 57(iii), therefore, for the said reason he had not raised a claim as regards seeking deduction of the same under Sec. 24(b) of the Act. However, we find that the assessee had unsuccessfully raised such claim before the A.O and the CIT(A). On a perusal of the reasoning given by the CIT(A) for not accepting the said claim of the assessee, we find that he had declined to accept the same, for the reason that the assessee had neither furnished the computation of the annual lettable value of the said property, nor placed on record any document evidencing the fact that the property under consideration was ready for occupation. 8. We have given a thoughtful consideration to the aforesaid claim of the assessee in the backdrop of the facts available on record. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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