Case Law Details
Acuity Holdings Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Undisputedly, the subject premise in respect of which the assessee has claimed the rental expenses has been taken on lease by the assessee. Though, in the leave and license agreement, it is mentioned that it has been taken on lease for the use of residence of directors/employees, however, it cannot be said that in course of such user, the directors are not doing any official work, such as, meeting the investors, etc. Therefore, merely because as per the terms of the leave and license agreement the premise is to be used foRer residence purpose of the directors, assessee’s claim cannot be rejected. The Tribunal in Stuish Capital Services Pvt. Ltd. (supra) while considering the allowability of depreciation on a premise taken on lease for use of director’s residence allowed assessee’s claim by holding that since the company is engaged in share trading, the premise is used by directors for official work also, hence, as per CBDT Circular and the decision of the Hon’ble Delhi High Court in CIT v/s Modi Industries Ltd., [1994] 210 ITR 001 (Del.), assessee’s claim is allowable. The ratio laid down in the aforesaid decision squarely applies to assessee’s case.
Interest expenditure incurred in relation to interest income earned is allowable
The short issue arising for consideration is, whether the interest expenditure incurred by the assessee is in relation to interest income earned during the year so as to allow it as deduction under section 57(iii) of the Act. It is the specific contention of the assessee that the borrowed funds on which the assessee has paid interest was utilized for investing in derivatives and NCDs. It is the claim of the assessee that in the year under consideration, it has earned interest of Rs. 1,57,55,101, on the NCDs. Therefore, a part of interest expenditure is relatable to interest earned on NCDs, hence, has to be set–off against such income. In our view, if the borrowed fund or part of it has been utilized in acquiring the NCDs, then the interest on such borrowed fund has to be set–off against the interest income earned on NCDs to the extent of utilization of borrowed funds in NCDs.
FULL TEXT OF THE ITAT JUDGEMENT
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Dear sir
I am working in best company and my company wants to take a flat on lease basis on my NAME for 3 years, rent is 15 Lack.
could you please help. what about tax liability and also is there in process for above. could you pl guide.
thankx
pramod sakpal