9911796707
TMI Blog2025 (3) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer and filed the requisite details from time to time. 3. During the course of assessment proceedings the Assessing Officer noted that the assessee has showed interest income under the head ' Income from other sources' of Rs. 1,03,18,929/-. Further, the assessee has claimed deduction u/s 57(iii) of the Act of Rs. 1,03,18,929/- against the income from 'other sources'. According to the Assessing Officer, as per the provisions of section 57(iii) of the Act, any other expenditure (not being in the nature of capital e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2016-17. It was also submitted that in the earlier years such claim of interest payment was allowed u/s 57(iii) of the Act. 6. However, the Assessing Officer was not satisfied with the arguments of the assessee. Rejecting the various explanations given by the assessee and relying on various decisions, the Assessing Officer disallowed the payment of interest amounting to Rs. 1,03,18,929/- and made addition of the same to the total income of the assessee. 7. In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer on the ground that there is no correlation between the interest earned and interest paid as required u/s 57 of the Act. 8. Aggrieved with such order of Ld. CIT(A) / NFAC, the assessee is in appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deep Sales Pvt. Ltd. totaling Rs. 6,50,00,000/-, an amount of Rs. 6,00,00,000/- have been advanced to Shubham Vipra Associates and Shubham Housing Developers Pvt. Ltd. on various dates, the details of which are as under: Sr. No Receipt from Vikas Deep Sales Private Limited Application of Funds Balance as on 31st March 17 Date Amount Date Amount Name of the party 1 10-04-2015 3,00,00,000.00 10-04-2015 3,00,00,000.00 Shubham Vipra Associates 4,75,45,043.00 2 28-04-2015 3,00,00,000.00 30-04-2015 2,50,00,000.00 Shubham Housing Developers Private Limited 3,22,11,454.00 3 13-05-2015 50,00,000.00 13-05-2015 50,00,000.00 Shubham Housing Developers Private Limited 6,50,00,000.00 6,00,00,000.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in the instant case disallowed the claim of deduction u/s 57 of the Act on account of payment of interest out of interest income on the ground that the assessee could not justify that such expenditure was incurred wholly and exclusively for the purpose of earning such income from other sources. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer on the ground that there is no direct nexus between the interest earned and the interest expended. It is the submission of the Ld. Counsel for the assessee that out of the loan amounts received from Vikas Deep Sales Pvt. Ltd. on 10.04.2015 amounting to Rs. 3.00 crores, a loan of Rs. 3 crores was given on interest to Shubham Vipra Associates on the very same day i.e. 10.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not furnished any required details. Subsequently, vide Reminder letter dated 28.12 2020 and Notice u/s 142(1) of the IT Act, dated 03.02.2021, the assessee was asked to furnish the required details and also noticed that in the absence of required detail, why an amount of Rs. 97,27,186/- being claimed as Deduction u/s. 57 under the head Income from Other Sources should not be disallowed? In response, the assessee furnished the details and nature of income offered under the head income from other sources are as under- S.No Particulars of Interest Received Amount Rs. 1 Shubham Vipra Associates (Interest Received @18%) 85,58,107 2 Shubham Civil Projects Pvt Ltd 20,24,200 3 Shubham Housing Developers Private Limited 12,50,46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly and exclusively and not necessarily for the purpose of making or earning the income irrespective of the fact that the assessee make the profit out of such expenses not. Further, that assessee stated that when the borrowed funds have been utilized for the purpose of making investment on which income earned is taxable, then the deductions for the interest on the borrowed fund is required to be allowed. The assessee's submission along with details furnished have been verified. After verifying, the assessee's claim for deduction u/s. 57 is accepted." 14. Since the assessee in the instant case has proved the nexus of amount borrowed on which interest has been paid and the amount lent on which interest has been earned and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
