The assessee borrowed funds and utilised them for lending money to various parties. AO disallowed the interest paid . CIT (A) confirmed the order of the AO. On appeal the Tribunal held that, interest paid by assessee on money borrowed was to be allowed under S. 57(iii) even if it did not earn interest income on money lent by it. Followed CIT v. Rajendra Prasad Moody ( 1978) 115 ITR 519 (SC). (AY. 2015 -16)
Akash Goyal. v. ACIT (2020) 180 ITD 551 (Agra) (Trib.)
S. 57 : Income from other sources – Deductions – Interest paid on borrowed money- Advanced to earn interest – Though no interest is earned on money lent ,interest paid is allowable as deduction .[ S.56 , 57(iii) ]