Expenses incurred to earn Interest Income can be claimed u/s 57(iii)

ITO Vs. M/s Borojalingh Tea Co. (ITAT Kolkata)

The question before us arises so as to whether the assessee is entitled for claiming the interest expense against the interest income in the given facts and circumstances. It is undisputed fact that the loan was provided to the parties on interest and accordingly interest income was earned. Now the question arises whether the fund used by the assessee in providing loan was interest bearing or not. On perusal of the balance-sheet we find that assessee has been paying interest on the capital contributed by the partners to the firm as well as money borrowed by the firm from the outside. As the interest bearing fund has been advanced by the assessee to the parties to earn interest then in our considered view the interest paid qua to the interest income was very much eligible for deduction u/s 57(iii) of the Act.

Full Text of the ITAT Order is as follows:-

These two appeals by the Revenue are directed against the different order of Commissioner of Income Tax (Appeals)-XX, Kolkata of even date 01.07.2014. Assessment was framed by ITO Ward-34(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his orders dated 17.12.2013 & 28.02.2014 for assessment years 2011-12 & 2012-13 respectively. Shri Raj Kumar Patodi, Ld. Authorized Representative appeared on behalf of assessee and Shri Arindam Bhattacherjee, Ld. Departmental Representative appeared on behalf of Revenue.

2. Both appeal are heard together and are being disposed off by way of this consolidated order for the sake of convenience. First we take up ITA No. 1964/Kol/2014 for A.Y. 2011-12.

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