THE COMMISSIONER OF INCOME TAX - 20, MUMBAI vs. SMT. SUSHILA DEVI KHADARIA, MUMBAI

JUDGMENT :

in the appeal memo are as follows.

a) The substantial question of law arises in the present

appeal is regarding the true scope

and correct

interpretation of Sec.68 of the income

Tax Act,1961 and other provisions and whether on the facts and circumstances of the case and in law

the Hon’ble Tribunal is right in upholding

the order

of the

CIT(A)

and deleting

the addition

of

Rs.41,93,729/-

being

the disallowance

consisting of fresh loans and the CNR No : HCBM020167702008 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:47

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interest on old loans?

b)

Another

substantial question of law

which arises

in the present appeal is regarding

the true

scope and correct interpretation of Sec.57

of the Income Tax Act,1961 and other provisions

and whether

on the facts and circumstances

of the case

and in law the Hon’ble

Tribunal

is right

in

deleting

the

disallowance

of Rs.17,84,036/-being

the interest

and paid?

hinges

on the fact as to whether the five fresh

loans

for the total of Rs.38,10,000/- taken

by the were genuine

in nature.

It was never

in dispute that all these fresh loans were taken by account

payee cheques and the record indicated that there was no cash

payment

in the account of the lonee prior to the issuance

of such cheques.

After analysing the entire

evidence

regarding

grant

of these loans, there

is a concurrent

finding

of fact of CIT(A) as well

as ITAT

that the loans

were genuine loans.

The details

of repayments

were also furnished.

There

is also a concurrent

finding that the of Rs.4,36,838/- was the interest paid by the on such genuine loans.

This being

a concurrent finding of fact, we find

that Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:47

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the additions in respect of such loans and interest were correctly held not to be sustainable and the question of law as framed does not arise.

to be contended by counsel for the revenue

that all the documents filed before the CIT (A) were not made

available to the Assessing Officer.

There appears to be no substance

in this contention.

It is mentioned

in para-4

of the ITAT’s judgment that two paper books were filed

before the CIT (A) and the Assessing Officer

was given opportunity to examine the additional

corroborative documents.

has disallowed

the interest and of Rs.17,84,036

in respect

of the loans

borrowed.

The had claimed a deduction under Section-57 (iii)

of the Act.

The Assessing

Officer

disallowed

this on the ground that the had not fulfilled

the

conditions

of

claiming

deductions

under Section-57(iii)

read

with Section 58 of the Act

by holding

that the expenditure

was not proved

to be related

to the purpose of earning income.

He held that as the activity of the was earning profits

by selling

shares

in the stock market and the dividend

income

had accrued as a by product, the expenditure was Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:47

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not incurred wholly for the purpose of earning

income.

In the assessee’s

appeal, CIT(A)

observed

that the Assessing officer had not disputed the purchase and sale

of shares

as a part of investment.

The investment

in shares

was to the tune of Rs.72.00 lacs as disclosed in the balance

sheet of the assessee.

The had also received

income

by way of dividends

on these

shares.

This income along with and the interest

was shown as income from other sources.

The interest

was paid on loans obtained for making

these

investments

in shares and relying upon the judgment

of the Supreme Court in the case of Seth R.

Dalmia Vs.CIT Seth R.

Dalmia Vs.CIT Seth R.

Dalmia Vs.CIT

wherein

it was held

that

the nexus

between

the expenditure

and the income need not be direct and even

an indirect connection could prove the nexus between the expenditure incurred and the income earned, he held that the expenditure to be deductible.

He further held that the quantum

of dividend earned had nothing to do

with the quantum of claim of interest made u/s.

57(iii)

of the Income Tax Act.

In such circumstances, the CIT(A)

allowed

the expenditure at Rs.17,84,036/- as a deduction

under Section 57(iii) of the Income Tax

Act.

The finding

that the

aforesaid represented

payment

of interest and in relation

to genuine loans has been confirmed by the ITAT and this is also a question of fact. In these circumstances, the question of law as framed also does not arise. Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:47

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dismissed.

(R.S. MOHITE, J.)

( F.I. REBELLO, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:47 Powered by TCPDF (www.tcpdf.org)