TMI Blog2020 (7) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase of the property, then the borrowed fund from HSBC bank amounts to utilization of same for the purpose of purchase of the property. As held that since the amount was purchased from the borrowed funds of the HSBC bank, interest paid by the assessee should be allowed as a deduction. The above facts are not disputed by the revenue. Even it was not shown to us that the order of the learned CIT A for assessment year 2011 12 has not been accepted by the revenue and is agitated before the higher forum. In view of this, we do not find any infirmity in the order of the learned CIT A in directing the learned assessing officer to ascertain the interest on funds utilized for acquisition of the property on which rental income has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed - HELD THAT:- On careful analysis of the order of the learned CIT A, we found that he relied on the order of his predecessor for assessment year 2011 12 wherein all the facets of the allowability of those expenditure have been considered and disallowance has been deleted. We also do not find any infirmity in the order of the learned CIT A in following the order of his predecessor, when revenue could not produce any evidence before us that the order of the CIT A for assessment year 2011 12 has not been accepted by the revenue. - Decided against revenue. - ITA No. 210/Del/2018 - - - Dated:- 15-5-2020 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Gautam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs, 98,27,363/- on account of various business expenses claimed by the assessee without considering the fact that the assessee had not carried out any business activity during the relevant period and also by ignoring the fact that the assessee failed to justify that expenses were incurred wholly and exclusively for the purpose of business? 3. Brief facts of the case shows that assessee is a company carrying on the business of builders, colonizers developers and to act owners. However, the AO found that company is dealing mainly in mutual funds and had purchased commercial property at Mumbai for earning rent. The assessee filed its return of income on 30 11 12 declaring nil income. The assessee has earned rental inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m income from house property. During assessment proceedings the learned assessing officer found that assessee has paid interest of ₹ 1 5433735 to HSBC bank Ltd on loan borrowed against bonds. He noted that it clearly shows that no part of the loan was borrowed for acquisition of the property but was used for further investment in various bonds invested by the assessee company. Therefore, he held that, as the assessee has not invested any fund for purchase and acquisition of the property but used loan for investment in the bonds, income from which has been claimed as exempt income. Therefore the above interest expenditure cannot be allowed as a deduction under section 24 (b) of the income tax act. 6. The learned CIT A found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase of rented property. The learned CIT A in the previous year has reached at a finding that until the amount has been utilized in the investment of bonds et cetera, no interest can be claimed by the assessee as deduction under the income from house property. However when such bonds have been redeemed and utilized for the purpose of purchase of the property, then the borrowed fund from HSBC bank amounts to utilization of same for the purpose of purchase of the property. Therefore, he held that since the amount was purchased from the borrowed funds of the HSBC bank, interest paid by the assessee should be allowed as a deduction. The above facts are not disputed by the revenue. Even it was not shown to us that the order of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 694). He further directed the learned assessing officer to recompute the disallowance to exclude the interest expenditure, which pertains to the income from house property and in respect of the interest expenditure related to the income from other sources. He was directed to consider the remaining interest expenditure for the purpose of computation of the disallowance. With respect to the disallowance of 0.5% of the average value of the investment, he directed the learned assessing officer to consider only those bonds, which yielded tax-free income. After hearing the parties on this issues, we do not find any infirmity in the order of the learned CIT A in directing the AO so. Furthermore, the learned CIT A has followed the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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