TMI Blog2024 (3) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... income earned of term deposit is also not in accordance with the decision of the coordinate bench wherein in case of Mr. Ashwin Mehta [ 2019 (11) TMI 1450 - ITAT MUMBAI] wherein against the interest receipt of ₹ 1,801,778/ the coordinate bench has granted the deduction of ₹ 21,969,050/ . Thus we direct the learned assessing officer to allow the claim of the assessee of deduction of interest expenditure. Accordingly, ground is allowed. Charge of interest u/s 234B - HELD THAT:- The proviso to section 209 (1) has been inserted with effect from 1 April 2012. Therefore if any income of the assessee on which tax is deductible, the interest under section 234B shall not be chargeable prior to 1 April 2012. AO is directed to compute the interest in accordance with the law as it was prevailing for assessment year 2006 07. Accordingly ground number 3 of the appeal is allowed with above direction. - Shri Prashant Maharishi, AM And Shri Rahul Chaudhary, JM For the Assessee : Shri Dharmesh Shah Ms. Jigna Jain, ARs For the Revenue : Shri Dr. P. Daniel, Spl. Counsel ORDER PER PRASHANT MAHARISHI, AM: 01. ITA number 382 0/M/2022 is filed for assessment year 1999 2000 by Harsha estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 2/2/2015 the issue was set-aside to the file of the AO with direction to verify the issue. v. The assessing officer passed the order under section 143 (3) read with section 254 of the act dated 29/6/2016 assessing the total income of Rs. 6,232,130. The issue before the learned assessing officer was with respect to the deductibility of the interest liability pertaining to the family members of the assessee amounting to Rs. 32,795,923/ . The assessee submitted that that assessee has taken interest-bearing loan from JH Mehta and others for making investment in the shares and securities. Since the interest was paid to these parties amounting to Rs. 32,795,923/ in total and Rs. 43,706,074/ , (-) 20,06,509/ , (-) 89,03,642/ respectively. Thus, net interest expenditure of Rs. 32,795,923 is claimed as interest payable while determining the income from other sources. Thus, the claim of the assessee is that this interest expenditure is deductible against the interest income earned by the assessee. The assessee made; However, the learned AO was of the view that except making the submission assessee did not produce any new material. It was also stated before the learned assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, it can be inferred that all such assets are funded out of such unsecured loans and other liabilities, and it would be erroneous to claim the entire interest expenditure as having been incurred for earning interest income. Thus, he was of the opinion that the interest pertaining to unsecured loans is spread across all assets the claim of the appellant for deduction and interest income will reduce. Therefore, he also supported his view that the claim of the appellant has to be restricted. He further noted that the assessee has not furnished any working to show as to how the interest expenses claimed for the year have been worked out. Therefore, he held that (1) interest deduction shall not exceed the interest income as the funds were not borrowed to make investment in Term deposits only (2) subject to the above ceiling, the proportionate interest expenses are allowable. For this purpose, the interest expense can be attributed to the same ratio of average bank balance versus average loans. (3) The interest expenditure allowance cannot exceed the total income for it would result in giving indirect benefit to the appellant. Accordingly, he computed the average cash and bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, issue was raised about the Nexus of interest expenses with the interest income. It was stated therein that the liability in that case was accrued on account of purchase of shares and securities by the assessee which were sold in terms of the directions of the special court in subsequent years and the sale proceeds were received were invested in term deposits with the bank and accordingly the assessee has claimed interest expenditure against the interest on term deposits. After considering the above facts, the coordinate bench has allowed the above deduction of interest expenditure therefore according to him the issue is squarely covered in favour of the assessee and the assessee is entitled to the deduction of the complete interest expenditure of Rs. 3.27 crores. 09. The learned departmental representative vehemently supported the order of the learned lower authorities. It was stated that the assessee has claimed the interest expenditure of Rs. 3.27 crores whereas it has earned only the deposit interest of Rs. 41 lakhs. The learned CIT A accordingly has granted proportionate deduction of interest expenditure to the assessee. He submitted that according to the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore if any income of the assessee on which tax is deductible, the interest under section 234B shall not be chargeable prior to 1 April 2012. However the learned assessing officer is directed to compute the interest in accordance with the law as it was prevailing for assessment year 2006 07. Accordingly ground number 3 of the appeal is allowed with above direction. 012. Before us the assessee has raised an additional ground of appeal on 7 March 2024 wherein the assessee has stated that the learned assessing officer has observed that the income of the appellant remains unchanged at ₹ 6,232,130 as per order dated 31/12/2010 however the assessee has stated that the learned CIT A per order dated 20/11/2013 has directed the learned assessing officer to add adopt the interest income at ₹ 4,108,355/ as against ₹ 6,849,683. Accordingly the total income of the assessee requires to be adjusted according to the direction of the learned CIT A. It is submitted before us that the learned AO has not carried out the direction of the learned CIT A. We direct the assessing officer to compute the correct income as per the direction of the learned CIT A. Thus additional ground f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
