Interest expenditure on borrowings is deductible u/s 57(iii) against interest income from sister concern loans if direct nexus exists, even as 'income from other sources'; prior Tribunal netting decision followed for consistency across years.

ORDER

PER SATBEER SINGH GODARA, JM

These Revenue’s five appeals ITA Nos. 2926, 2927, 2928, 2929 & 2930/Del/2024 for assessment years 2013-14 to 2017-18, are directed against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s orders, all dated 13.12.2023, having DIN and order nos. ITBA/NFAC/S/250/2023-24/1058723162(1); ITBA/NFAC/S/250/2023-24/1058723640(1); ITBA/NFAC/S/ 250/2023-24/1058724011(1); ITBA/NFAC/S/250/2023-24/ 1058724386(1) and ITBA/NFAC/S/250/2023-24/1058724846(1), involving proceedings under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively.

2. Heard both the parties. Case files perused.

3. The Revenue’s “lead” appeal ITA No. 2926/Del/2024 raises the following substantive grounds:

“"Whether on the facts and circumstances of the case and law, because the decision of the Ld. CIT(A)'s order regarding claim of Bank's Loan Interest expenses of Rs. 30,69,00,000/- adjusted against the income arising out of loan and advance given to its sister concern out of surplus funds is not acceptable as being not related to industrial park activities, and thus ineligible for deduction u/s 801A of the IT Act, 1961 as the assessee company.

Because no records to substantiate that the surplus funds out of the loan could be invested or could be given as loans to other company for earning interest income for eligibility of deduction u/s 801A, claim of deduction of matter the loans have to be related to the Act."

4. Both the learned representatives next invited our attention to the CIT(A)/NFAC’s detailed lower appellate discussion deciding the above solitary substantive issue in assessee’s favour as under: -

“5.1 The assessee DLF Info City Developers Kolkata Limited is a private company. Assessee e-filed the return of income for A.Y. 2013- 14, therein declaring a total income of Rs.Nil. The assessee had claimed interest expenditure of INR 53,72,78,000/- and a gross interest income of INR 30,69,00,000/-. It is pertinent to note that, the interest expenditure was incurred by the assessee on term loan taken from bank and interest income was primarily on account of advances given to related party. As per the Assessing Officer the assessee did fail in computing the correct computation of income; and the interest income amounting to Rs. 30,69,00,000/- should have been added back to the taxable income of the assessee company, and the deduction u/s 80IA in respect of which is not allowable.

In view of above facts, the Assessing Officer had reason to believe that the income to the extent of Rs. 3069.00 lakh chargeable to tax or any other income which comes to the notice subsequently in the course of assessment proceedings u/s 147, had escaped assessment for the A.Y. 2013-14 within the meaning of section 147 of the Income Tax Act, 1961. This information available as material on record, led to the cause and justification for reason to believe that, income of at least Rs. 30,69,00,000/- within the meaning of section 147 of the I.T. Act,1961, had escaped assessment in the case of assessee, for previous year 2012-13 i.e. A.Y. 2013-14. The Assessing Officer stated that proceeding u/s 147 of the Act, had been initiated after taking necessary statutory approvals. Notice u/s 148 of the Act was issued on 30/03/2021, vide DIN ITBA/AST/S/148/2020- 21/1031926464(1), and this was duly served upon the assessee on 30 March 2021 and 30 days time was provided to the assessee to file the ITR.

As the assessee had not filed the ITR against the notice u/s 148 notice u/s 142(1) has been issued and served on 24.11.2021, therein requesting the assessee to file the ITR. In the submission dated 25.11.2021, the assessee claimed to have ha