The assessee is engaged in the business of running Hotel and had made investments in a Company which is also engaged in the same business. For making such investments, assessee borrowed funds from Bank as well as took unsecured loans. On the total borrowings, assessee paid interest of Rs. 1.73 crores which was set off against interest income of Rs. 1.26 lakhs earned from fixed deposits. This resulted into total loss of Rs. 1.71 crores and the same was claimed as set off against income from business and capital gains u\/s. 71 of the Act. The\u00a0 AO disallowed the interest of Rs. 1.73 crores paid u\/s. 57(iii) of the Act by alleging that the assessee had diverted the interest bearing funds for non-business purposes. On appeal CIT(A)\u00a0 held\u00a0 that the AO had not disputed the fact that investment made was for the purpose otherwise than for earning of the income and therefore allowed deduction u\/s. 57 of the Act.\u00a0\u00a0 On appeal by the revenue the Tribunal affirmed the view of the\u00a0 CIT (A). Followed S.A. Builders Ltd v.CIT (2007) 288\u00a0 ITR 1 (SC), CIT v. Rajendra\u00a0 Prasad\u00a0 Moody (1978)\u00a0 115 ITR\u00a0 519 (SC) (AY 2012-13)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 71 : Set off of loss-One head against income from another \u2013 Commercial expediency-Interest paid on borrowed funds which are used for business purpose is an allowable expenditure which can be set off against interest income and the resultant losses can be set off against other head of income. [S. 57(iii)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7516","post","type-post","status-publish","format-standard","hentry","category-digest"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-1Xe","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/7516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=7516"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/7516\/revisions"}],"predecessor-version":[{"id":7517,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/7516\/revisions\/7517"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=7516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=7516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=7516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}