TMI Blog2021 (11) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of making or earning such income. Section 57(iii) of the Act does not require that the expenditure incurred is deductible only if expenditure has resulted in actual income. As long as the purpose of incurring expenditure is to earn income, the expenditure would have to be allowed as a deduction under Section 57(iii) of the Act. Under Section 57(iii) of the Act a nexus between the expenditure and income has to be ascertained. The assessee was therefore, entitled to deduction under Section 57(iii) of the Act. The tribunal exceeded its jurisdiction in disallowing the entire interest expenditure and the power of the tribunal is limited to passing of the order in respect of subject matter of the appeal. Thus substantial quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in holding that on the borrowings in question, the appellant was neither entitled to claim any deduction under Section 57(iii) of the Income Tax Act, 1961nor for a deduction under Section 36(1)(iii) of the Act? (b) Whether on the facts and in the circumstances of the case, the finding of the Income Tax Appellate Tribunal, that the appellant had failed to prove its contention in the alternative that he borrowings in question were made for business purposes, is perverse? (c) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has not been justified in making the observations that the deduction as claimed was not allowable not only in excess of interest expenditure over interest earned, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 57(iii) of the Act. The return of income was taken up for scrutiny assessment and the Assessing Officer passed an order on 30.11.2011 making a disallowance of a sum of ₹ 81,95,426/- under Section 37 of the Act. The aforesaid order was challenged before the Commissioner of Income Tax (Appeals) and was upheld by an order dated 25.09.2013. The tribunal dismissed the appeal by an order dated 24.06.2016. In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for the assessee submitted that deduction for interest paid to Union Bank of India ought to have been allowed under Section 57(iii) of the Act. It is also urged that authorities could not have gone into the motive of the transaction. Alternatively i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing such income. Section 57(iii) of the Act does not require that the expenditure incurred is deductible only if expenditure has resulted in actual income. As long as the purpose of incurring expenditure is to earn income, the expenditure would have to be allowed as a deduction under Section 57(iii) of the Act. Under Section 57(iii) of the Act a nexus between the expenditure and income has to be ascertained. The assessee was therefore, entitled to deduction under Section 57(iii) of the Act. 7. In any case, the tribunal exceeded its jurisdiction in disallowing the entire interest expenditure and the power of the tribunal is limited to passing of the order in respect of subject matter of the appeal. 8. For the aforementioned reasons, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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