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Facts
The assessee, a director of a company, advanced a home loan taken from a bank to the company. The assessee claimed deduction under Section 57(iii) of the Income Tax Act for the interest paid on this loan. The Assessing Officer disallowed this deduction for the impugned assessment year.
Held
The Tribunal observed that the deduction for interest on the home loan had been allowed in preceding assessment years on identical facts. Therefore, the matter was restored to the Assessing Officer for verification of the past claims and to follow the rule of consistency.
Key Issues
Whether interest paid on a home loan, advanced to a company in which the assessee is a director, is eligible for deduction under Section 57(iii) when such deductions were allowed in previous years on identical facts.
Sections Cited
57(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH SMC, DELHI
Before: SHRI VIKAS AWASTHY
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 13.08.2025, for Assessment Year 2020-21.
The solitary issue in the present appeal by the assessee is denial of deduction u/s.57(iii) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) claimed by the assessee in respect of interest paid Rs.27,16,082/-.
Shri R. K Gaur, appearing on behalf of the assessee submits that the assessee is a Director of Harvin Impex P. Ltd. company. The assessee had initially taken Home Loan in the year 2012 from IDFC First Bank Ltd. The loan repayment schedule is at pages 36 to 38 of the paper book. The assessee had advanced the said loan to Harvin Impex P. Ltd. and claimed deduction u/s.57(iii) of the Act. The Assessing Officer (AO) in the impugned assessment year disallowed assessee’s claim of deduction on interest payment of Rs.27,16,082/-. The ld. AR submitted that, the assessee had taken loan under the category of Housing Loan as the rates of interest was cheaper. The purpose of loan was for advancing to the company. The ld. AR further contended that the assessee is claiming deduction u/s.57(iii) of the Act in the past on the said loan and the same was allowed to the assessee. However, in the impugned assessment year the same has been denied on identical set of facts.
Per contra, Shri Manoj Kumar representing the department vehemently supporting the impugned order prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The limited issue in the present appeal for consideration is assessee’s eligibility for claiming deduction u/s.57(iii) of the Act in respect of interest on loan advanced to the company wherein assessee is a Director. A perusal of the impugned order shows that the assessee had taken loan under three loan accounts, as under:-
S. No Bank/Finance Loan Agreement Product Amount Interest paid Company Finance during the FY 2019-20 1 Capital First 2005015 LAP 1,08,10,000 9,72,822 2 IDFC Frist Bank 551947 HL 11,79,85,000 34,91,412 3 IDFC First Bank 3865600 LAP 1,39,73,000 13,74,460
The AO/CIT(A) allowed deduction u/s.57 of the Act in respect of two accounts i.e. at Sr No. 1 & 3 of the above table. Both the said accounts were Loan Against Property (LAP). The AO disallowed deduction u/s.57 of the Act in respect of third loan, where the loan account was for ‘Home Loan’. The contention of the ld. AR is that in the preceding assessment years the deduction claimed u/s.57(iii) of the Act in respect of interest paid on Home Loan account was allowed whereas in the impugned assessment year on identical set of facts assessee’s claim of deduction has been rejected. I deem it appropriate to restore this issue back to the AO for the limited purpose of verification of assessee’s claim of deduction in the past. If deduction u/s.57 of the Act has been allowed to the assessee in respect of Home Loan in the preceding assessment years the same be allowed in the impugned assessment year, following rule of consistency.
In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on Wednesday the 14th day of January, 2026.