ASHUTOSH KUMAR HUF ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX 24(1), MUMBAI

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ITA 3275/MUM/2025Status: DisposedITAT Mumbai02 July 2025AY 2016-17Bench: SHRI NARENDRA KUMAR BILLAIYA, HON'BLE (Accountant Member), SHRI SANDEEP SINGH KARHAIL, HON'BLE (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that there was a direct nexus between the interest earned by the assessee and the interest paid on the borrowed funds, based on a prior penalty order which also found a direct nexus. Therefore, the interest payment claimed as deduction was allowed.

What were the facts?

The assessee borrowed interest-bearing funds and declared gross interest income. The assessee claimed interest expenditure paid on these borrowed funds as a deduction. The AO disallowed the deduction for lack of a direct nexus between the interest income and the interest expense.

What were the issues?

Whether interest paid on borrowed funds for earning interest income is deductible under Section 57 of the Income Tax Act when a direct nexus is established?

Which sections of the Income-tax Act were involved?

Section 57,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SANDEEP SINGH KARHAIL, HON’BLE

For Appellant: Shri Madhur Agarwal & Shri Fenil Bhatt, A/Rs
Hearing: 30/06/2025Pronounced: 02/07/2025

Heard together (2 matters)

I.T.A. No. 3275/Mum/2025
I.T.A. No. 892/Mum/2025

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R PER NARENDRA KUMAR BILLAIYA, AM: & I.T.A. No. 892/Mum/2025 are two separate appeals by the assessee preferred against two separate orders dt. 06/01/2024 and 13/12/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AYs 2016-17 and 2017- 18 respectively.

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