INCOME TAX OFFICER, GURGAON V. DLF INFO CITY DEVELOPERS (KOLKATA) LIMITED, GURGAON

ITA 2926/DEL/2024

AI Insights

The case involves the Income Tax Officer, Gurugram, Haryana as the appellant and DLF Info City Developers (Kolkata) Limited as the respondent, concerning the assessment years 2013-14 to 2017-18. The primary issue was the treatment of interest income and expenditure related to loans and advances between the assessee and its sister concerns. The Revenue challenged the CIT(A)'s decision which allowed the netting of interest income against interest expenditure, treating the interest income as business income. The Tribunal's decision followed the precedent set in the assessee's own case for the assessment year 2012-13, where similar treatment was upheld.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126757 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: Vodafone South limited Vs. CIT, PCIT Vs. Jubilant Energy Nelp \\u2013 V P Ltd., ITO Vs. M/s. Brahma Associates, CIT Vs. Bokaro Steels Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Set aside; Business income; Proportionate interest; Business expenditure; Rule of consistency; Source of fund; Reason to believe; Grounds of appeal; Subsequent Assessment; Dismissed; National Faceless Appeal; Commissioner; Commissioner of Income Tax; Deleted; Department; Review; Apex Court Decision; Claim of deduction; HSBC; Loans and advance
• Section: 147; 148; 143(3); 142(1); 251; 13; 80IA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2926/Del/2024 Assessment Year: 2013-14 With ITA No.2927/Del/2024 Assessment Year: 2014-15 With ITA No.2928/Del/2024 Assessment Year: 2015-16 With ITA No.2929/Del/2024 Assessment Year: 2016-17 With ITA No.2930/Del/2024 Assessment Year: 2017-18 Income Tax Officer, Gurugram, Haryana Vs. DLF Info City Developers (Kolkata) Limited, 3rd Floor, Shopping Mall Complex, DLF Phase-1, Gurgaon. PAN: AABCD9621N (Appellant) (Respondent) Assessee by Sh. R.S. Singhvi, CA Sh. Satyajeet Goel, Adv. Department by Sh. Surender Pal, CIT(DR) Sh. Rajesh Kumar Dhanesta, Sr. DR Date of hearing 16.04.2025 Date of pronouncement 25.04.2025 ITA Nos.2926 to 2930/Del/2024 2 | P a g e 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 ITA Nos.2926 to 2930/Del/2024 3 | P a g e 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 had filed the ITR on 05.1.2021. As ITR filing in the case of an assessee consists of two legs. One by filing the ITR and receiving the ITR-V; and, then by adopting one of the various modes of verification, verifying the said ITR. In this case, the assessee had defaulted in complying to the ITA Nos.2926 to 2930/Del/2024 4 | P a g e notice us/148 [which they claim to be for technical glitches], and / or verifying the ITR. Though the copy of the ITR is being taken into account for the purpose of figurative calculations, the filing of the ITR is non est and is therefore treated as an invalid ITR. In the course of the proceeding, the assessee Co. had objected to the reasons of reopening as had been provided for. The order of rebuttal of the objections had then been accordingly passed and served upon the assessee, wherein the assessee’s strong objection with the initiation of the proceeding u/s 147 of the Act had been duly responded with by the Assessing Officer. As per the Assessing Officer the assessee derived income from the business, subject to deduction u/s 80IA of the Act. However, apart from the business income, the assessee also made investment in the form of loan to other parties and had earned interest income, which is not the income derived from business, but is assessable as ‘income from other sources’ as per the Act. Where the immediate nature of the income has been characterised as interest income, there is no reason whatsoever, to go beyond the immediate nature of the income and attribute to it some character. Therefore, the income earned from advancing of loan by way of interest is solely assessable to tax under the head – ‘income from other sources’. Therefore the Assessing Officer made an addition of Rs. 30,69,00,000/- to the total income of the appellant. 5.3 The appellant during the appellate proceedings objected framing the assessment u/s 147 r.w.s. 144 of the Income Tax Act, 1961 and submitted that the issue of taxing of interest income and claim of interest expense has been duly examined by the Hon’ble ITAT in earlier assessment year in appellant’s own case (i.e. AY 2012-13) in ITA No 894/Del/2018 vide order dated 20.11.2019 and that the matter stands decided in favour of the appellant. Relevant parts of the order of the ITAT are reproduced below- “QUOTE 17. We find merit in the arguments advanced by the Ld. Counsel for the assessee that such interest expenditure is an allowable expenditure u/s.57 (iii) even if the said interest income is considered as income from other sources by deviating from the stand of the department in the preceding as well as subsequent assessment years when such interest income has been treated as business income. 18. A perusal of the order of CIT(A) shows that assessee had given the bifurcation of interest income on loans and advances to parties and the interest expenditure on such borrowings and has shown net interest income of Rs. 7,85,61,480/- on which no deduction u/s. 80 IA has been claimed. The computation of net interest income as reproduced by CIT(A) at page 5 of his order is as under: ITA Nos.2926 to 2930/Del/2024 5 | P a g e Particulars (Rs.) Amount Interest Income on Loans & Advances (to Parties) Caraf Builders and Construction Pvt. Ltd. & Ors. 23,96,54,357 Interest Income on Income Tax Refund 41,925,436 Interest Income on delayed payment 8,840 (under the head other operating Income) 28,15,88,633 Less: Proportionate Interest Expenses (pertaining to loan given to Caraf Builders & Construction Pvt. Ltd.) out of borrowings 20,30,27,153 Net Interest Income 7,85,61,480 From the above it is clear that there is a direct nexus between the interest income of Rs.23.96 lakhs and interest expenditure of Rs. 20.30 lakhs. 19. We find the Hon’ble Delhi High Court in the case of Vodafone South limited Vs. CIT (supra), after considering the decision of Hon’ble Supreme Court in the case of Tuticorin Alkai Chemicals and Fertilizers Ltd. (supra) has held that where assessee having availed of loan from HSBC, advanced said amount to its holding company, i.e. SCL and since there was a direct nexus between earning of interest on loan advanced by assessee to SCL and payment of interest to HSBC on loan drawn in terms of sanction letter, assessee’s claim for netting off of interest in terms of section 57 (iii) was to be allowed. 20. Similarly the Hon’ble Delhi High Court in the case of PCIT Vs. Jubilant Energy Nelp – V P Ltd. (supra) has held that where assessee paid interest to sister concern on money borrowed and subsequently it earned interest income on Inter-Corporate Deposits (ICD’s), since there was direct nexus between interest paid and interest earned, interest paid to sister concern was deductable under section 57 while bringing interest income to tax as ‘Income from other sources. 21. The various other decisions relied by the ld. Counsel for the assessee also support his case that such interest expenditure has to be allowed as deduction from such interest income if such interest income is treated as income from other sources. We, therefore, hold that the assessee is entitled to netting of off interest expenditure and interest income. 23. Therefore, even if the proposition laid down by the CIT(A) that principle of rejudicata is not applicable to the income tax proceedings is accepted, however, the rule of consistency has to be followed. Since the revenue in the preceding as well as subsequent years has accepted such netting off of interest expenses from such interest ITA Nos.2926 to 2930/Del/2024 6 | P a g e income, therefore, on this score also the assessee is entitled to netting off. We, therefore, set aside the order of the CIT(A) and allow the grounds on this issue In view of the above facts and following the decision of the ITAT Delhi in ITA No. 894/Del/2018, in the case of assessee for A.Y. 2012-13, the Assessing Officer is directed to allow netting off of interest expenses from interest income in this year and this ground raised by the appellant stands allowed. Other grounds of appeal challenging the notice u/s 148 are rendered academic and need not to be decided upon since the ITAT has already allowed/taken the decision in favor of assessee on this issue and has asked revenue to follow the rule of consistency and allow netting off of interest expenses from interest income. 6. In the result the appeal filed by the appellant is Allowed..” 7. This leaves the department aggrieved who has filed its instant five appeals before the tribunal. We have given our thoughtful consideration to the Revenue’s and assessee’s respective vehement rival submissions. Learned CIT(DR) could hardly dispute the clinching fact that the impugned lower appellate discussion has followed the tribunal’s order in assessee’s case itself in assessment year 2012-13 allowing netting of interest income vis-à-vis interest expenditure. Learned CIT(DR) seeks to draw a distinction on two aspects i.e. the assessment herein had been framed under section 144 of the Act and the corresponding parties do not happen to be the same as they were in the said preceding assessment year 2012- 13, wherein the issue stands settled upto the tribunal. We find no merit in the Revenue’s instant twin arguments once the issue of netting of the assessee’s interest income vis-à-vis interest ITA Nos.2926 to 2930/Del/2024 7 | P a g e expenditure has been decided in its favour in assessment year 2012-13 as under: “2. Facts of the case, in brief, are that the assessee is a company engaged in the business of Real estate development, development of integrated township, technology parks etc. and renting of constructed properties. It filed its return of income on 30.09.2012 declaring total income of Rs.7,85,61,480/-which was revised to Rs.7,85,61,580/- on 31.03.2014. 3. During the course of assessment proceedings the AO noted that the assessee has claimed deduction of Rs.24,56,00,048/- as deduction u/s. 80IA in respect of profit derived from the Industrial park unit computed as per Form No. 10 CCB duly certified by chartered accountant. He, therefore, asked the assessee to explain as to why the deduction u/s. 80IA should not be recomputed by allocating appropriate expenses of employees cost towards the profit of the Industrial Development Park Unit. He noted that the assessee company has worked out an amount of Rs.7,85,61,515/- out of other income of Rs.28,19,27,000/- as the income not qualifying for deduction u/s. 80IA. Further, the expenses to the tune of Rs. 20,33,65,000/- out of the expenses of Rs.110,18,44,000/- debited to the profit and loss account have been allocated towards the other income to avail the maximum benefit of deduction u/s. 80IA. He, therefore, allocated 10% of the expenses of employees cost of Rs.1,19,79,000/- i.e. 11,97,900/- out of the expenses to Rs.20,33,65,000/- allocated towards the other income as allocated towards the income derived from the Industrial park unit. He accordingly recomputed the deduction u/s. 80IA and made addition to Rs.11,97,900/- to the total income of the assessee. 4. In appeal the Ld. CIT(A) deleted the addition of Rs.11,97,900/- on account of allocation of 10% employees cost to the Industrial park. He, however, noted that the assessee had claimed interest expenditure of Rs.20,30,27,153/- against the interest income of Rs.28,15,88,633/- which according to him was not in accordance with the provisions of law. He, therefore, issued an enhancement notice to the assessee asking him to explain as to why the income of the assessee should not be enhanced to this extent as the interest income has to be taxed under “income from other sources” since the interest expenditure on term loan taken from the bank is not an allowable expenditure against the interest income which is on account of loans given to related parties. 5. The assessee objected to the proposed enhancement notice on the ground that the same is beyond the jurisdiction of the CIT(A) since he cannot introduce a new source of income. It was argued that the interest income in the case of the assessee was taxable under the head business income. It was further argued that even if the interest income is taxable under the head “income from other sources”, the interest expenditure amounting to Rs.2030.27 lacs is an allowable expenditure u/s.57 (iii) of the IT Act. Relying on various decisions, it was argued that such interest expenditure is allowable as expenditure u/s. 57 (iii) from such interest income. ITA Nos.2926 to 2930/Del/2024 8 | P a g e 6. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee. So far as the argument of the assessee that the Ld. CIT(A) cannot introduce a new source of income is concerned he held that there is no new sources of income proposed in the notice of enhancement. As per the return of income filed, the assessee had shown other income of Rs.2819.27 lacs. The assessee had claimed the interest expenditure of Rs.2030.27 lacs against the interest income and the balance amount of Rs.785.62 lacs was offered for taxation. He noted that the AO in the assessment order has held that out of this expenditure claimed of Rs.2030.27 lacs, an amount of Rs.11,97,900/- being proportionate employee cost was required to be allocated towards income from Industrial park. However, in the proposed notice of enhancement it was proposed that the whole of interest expenditure of Rs.2030.27 lacs was required to be allocated to Industrial Park and the interest income of Rs.2815.89 lacs is required to be taxed under the head “income from other sources”. Therefore, the contention of the assessee is not tenable. He held that the power of the first appellate authority is wide and cannot be curtailed. It has the power to adjudicate and decide everything necessary to ascertain the true and correct income of the assessee. His powers are coterminous with that of the AO and he can do anything which the AO failed to do. 7. So far as the argument of the assessee that the interest income in the assessee’s case is taxable under the head business income is concerned, he also rejected the same. Further argument that in the earlier years and in subsequent year such interest income has been taxed as business income was also rejected by him on the ground that the principle of re-judicata is not applicable to the proceedings under the income tax Act. Further when the previous decision is plainly erroneous there is a duty of the court to review it and not perpetuate the mistake. 8. So far as the argument of the assessee that such interest expenditure is an allowable expenditure u/s. 57 (iii) is concerned he also rejected the same by relying on the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. reported in 227 ITR 172 and various other decisions. He accordingly enhanced the income and directed the AO to compute the income of Rs.28,15,89,000/- as against the returned income of Rs.7,85,61,550/-. 9. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :- 1.1 That CIT(A) has erred on facts and in law in re-computing deduction u/s 80IA of the Act at Rs. 4,25,72,564 as against Rs. 24,56,00,048 claimed by the appellant in the return and allowed by the Assessing Officer at Rs 24,44,02,148 in the assessment order dated 13.03.2015 U/s 143(3) of the Act. 1.2 That the Ld. CIT(A) has erred in reducing Rs. 20,30,27,153/- being interest from the income of industrial park eligible for deduction under section 80IA and, at the same time, computing taxable income from other sources (interest) at Rs. 28,15,89,000/- without allowing benefit of netting of interest. 1.3 That the Ld. CIT (A), while exercising powers u/s 251(1) of the Act has failed consider ITA Nos.2926 to 2930/Del/2024 9 | P a g e and appreciate that it is not within the realm of the Appellate authority to introduce a new source of income, which has neither been considered nor discussed in the impugned assessment order. 1.4 That the Ld. CIT(A), has failed to consider and appreciate that the interest income in the case of the appellant has been assessed under the head “Business income” and netting of interest has been allowed in the earlier years and as such, in absence of any change in facts, the impugned addition is in disregard to Rule of Consistency. 1.5 That the Ld. CIT (A) has wrongly relied upon the Apex court decision in the case of Tutikoran Alkalis 227 ITR 172 as same is distinguishable on facts and not applicable to the present case. 1.6 That the Ld. CIT(A) has erred in treating the interest on loans as Income from “Other Sources\" and , at the same time, the interest paid on the amounts given on loan as Business Expenditure, i.e., not allowing netting of interest which is patently incorrect and wrong as both the items i.e. receipts and expenditure need to be treated under the same head i.e., “Business Income\" or “Other Sources”. 2. That on facts and in the circumstances of the case the learned Assessing Officer while re-computing deduction u/s 80IA of the Act has erred in law, in making disallowance of Rs.11,97,900 on account of 10% of employee cost on wholly erroneous, illegal and untenable grounds. 2.1 That the Ld. Assessing Officer has failed to consider and appreciate that such sum has already been debited in the Profit and Loss Account and therefore, the disallowance has resulted into deduction of the same expenditure twice. 3. That the order dated 30.11.2017 passed u/s 250(6) of the Act is bad in law. 4. That the appellant craves leave to add, amend, alter, change, vary, substitute or raise any additional ground of appeal if it becomes necessary to do so in the interest of justice on or before the date of hearing. 10. The Ld. Counsel for the assessee at the outset did not press ground of appeal No. 2 and 2.1 for which the Ld. DR has no objection. Accordingly the same are dismissed. 11. Ground No.3 and 4 being general in nature are dismissed. 12. So far as the ground No. 1.1 to 1.6 are concerned, the Ld. Counsel for the assessee referring to the paper book page no. 21 to 30 drew the attention of the bench to the form No. 10 CCB duly certified by the auditors and submitted that there is no claim of deduction u/s.80IA on such interest income and expenditure. Referring to page No.18 of the order of Ld. CIT(A) he submitted that in the earlier and subsequent years the interest income has been taxed as business income. Further the assessee itself has excluded both the interest ITA Nos.2926 to 2930/Del/2024 10 | P a g e income and interest expenditure. Therefore, it is not proper on the part of the CIT(A) to introduce a new source of income and issue the notice of enhancement. 13. Referring to the decision of the coordinate bench of the Tribunal in the case of LG Electronics India Private Limited Vs. ACIT vide ITA No.3612&3613/Del/2017 order dated 18.07.2018 for A.Y. 2005-06 and 2006- 07, he submitted that the Tribunal relying on the decision of Hon’ble Delhi High Court in the case of CIT Vs. Sardari Lal and Co. reported in 251 ITR 864 and the decision of the Pune Bench of the Tribunal in the case of Ram Infrastructure Limited Vs. JCIT vide ITA No.746/Del/2013 order dated 30.12.2016 has held that when there is no discussion of any such disallowance either in the return of income or in the assessment order the disallowance made by the CIT(A) by discovering a new source of income is not sustainable in law. 14. So far as the deduction u/s. 57 (iii) is concerned the Ld. Counsel for the assessee referring to various decisions submitted that when there is a direct nexus between earning of interest on loan advanced by the assessee and payment of interest to the bank on loan drawn in terms of sanction letter, assessee is entitled to netting off interest in terms of section 57 (iii) and such claim was to be allowed. He accordingly submitted that both legally and factually the Ld. CIT(A) is not justified in enhancing the income and not allowing netting off. He also relied on the following decisions :- a. Pr. CIT Vs. Jubilant Energy Nelp V P Ltd. [2019] 102 taxmann.com 97 (Del) b. Vodafone South Ltd. Vs. CIT [2015] 378 ITR 410 (Del) c. ITO Vs. M/s. Brahma Associates (ITA 133/PN/13) (ITAT pune) d. CIT Vs. Bokaro Steels Ltd. 236 ITR 315 (SC) 15. The ld. DR on the other hand heavily relied on the order of the CIT(A). She submitted that the Ld. CIT(A) has not introduced any new source of income and has only recalculated / recomputed such income. Further the Ld. CIT(A) has given valid reasons as to why such interest income cannot be treated as “business income” and why principle of re-judicata will not be applicable. He has also given justifiable reasons as to why the interest expenditure of Rs.2030.27 lacs is not an allowable expenditure u/s. 57 (iii) of the IT Act. She accordingly submitted that the order of the CIT(A) be upheld. 16. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case has recomputed the deduction claimed by the assessee u/s.80IA and allocated 10% of expenses of the employee cost to the other income and thereby reducing the deduction claimed u/s. 80IA to the extent of Rs.11,97,900/-. He accordingly made addition of Rs.11,97,900/- to the total income of the assessee. We find the Ld. CIT(A) deleted the above addition made by the AO but issued an enhancement notice to the assessee on the ground that assessee has claimed interest expenditure of Rs.2030.27 lacs from the interest income of Rs.2819 lacs is not in accordance with law. ITA Nos.2926 to 2930/Del/2024 11 | P a g e According to the CIT(A) the interest income Rs.2815.89 lacs is required to be taxed under the head “income from other sources” and the assessee is not entitled to deduction u/s. 57 of the interest expenditure. While doing so he relied on the decision of the Hon’ble Supreme Court in the case of Tuticorin Alkai Chemicals and Fertilizers (supra) and distinguished the decision of Hon’ble Supreme Court in the case of Bokaro Steels Limited reported in 102 taxman.com 94. He also rejected the argument of the assessee that such interest was always treated as business income by the AO in the preceding and subsequent years on the ground that principle of re-judicata is not applicable to income tax proceedings and if the previous decision is plainly erroneous, it is the duty of the court to rectify it and not perpetuate the mistake. 16.1 It is the argument of the Ld. Counsel for the assessee that when there is no discussion of such disallowance in the assessment order, the Ld. CIT(A) cannot issue the enhancement notice by discovering a new source of income. It is also his submission that such interest income was always offered and taxed as business income and, therefore, in view of the consistent view of the department in the preceding as well as subsequent years the interest income has to be taxed as business income by following rule of consistency. It is also his submission that the assessee is entitled to claim deduction u/s.57 (iii) in respect of such interest expenditure out of the interest income even if such interest income is taxable under the head from “income from other sources”. 17. We find merit in the arguments advanced by the Ld. Counsel for the assessee that such interest expenditure is an allowable expenditure u/s.57 (iii) even if the said interest income is considered as income from other sources by deviating from the stand of the department in the preceding as well as subsequent assessment years when such interest income has been treated as business income. 18. A perusal of the order of CIT(A) shows that assessee had given the bifurcation of interest income on loans and advances to parties and the interest expenditure on such borrowings and has shown net interest income of Rs. 7,85,61,480/- on which no deduction u/s. 80 IA has been claimed. The computation of net interest income as reproduced by CIT(A) at page 5 of his order is as under :- Particulars Amount (Rs.) Interest Income on Loans & Advances ( to Parties) Caraf Builders and Construction Pvt. Ltd. & Ors. 23,96,54,357 Interest Income on Income Tax Refund 41,925,436 Interest Income on delayed payment 8,840 (under the head other operating Income) 28,15,88,633 ITA Nos.2926 to 2930/Del/2024 12 | P a g e Less : Proportionate Interest Expenses (pertaining to loan given to Caraf Builders & Construction Pvt. Ltd. ) out of borrowings 20,30,27,153 Net Interest Income 7,85,61,480 From the above it is clear that there is a direct nexus between the interest income of Rs.23.96 lakhs and interest expenditure of Rs. 20.30 lakhs. 19. We find the Hon’ble Delhi High Court in the case of Vodafone South limited Vs. CIT (supra), after considering the decision of Hon’ble Supreme Court in the case of Tuticorin Alkai Chemicals and Fertilizers Ltd. (supra) has held that where assessee having availed of loan from HSBC, advanced said amount to its holding company, i.e. SCL and since there was a direct nexus between earning of interest on loan advanced by assessee to SCL and payment of interest to HSBC on loan drawn in terms of sanction letter, assessee’s claim for netting off of interest in terms of section 57 (iii) was to be allowed. 20. Similarly the Hon’ble Delhi High Court in the case of PCIT Vs. Jubilant Energy Nelp – V P Ltd. (supra) has held that where assessee paid interest to sister concern on money borrowed and subsequently it earned interest income on Inter-Corporate Deposits (ICD’s), since there was direct nexus between interest paid and interest earned, interest paid to sister concern was deductable under section 57 while bringing interest income to tax as ‘Income from other sources. 21. The various other decisions relied by the ld. Counsel for the assessee also support his case that such interest expenditure has to be allowed as deduction from such interest income if such interest income is treated as income from other sources. We, therefore, hold that the assessee is entitled to netting of off interest expenditure and interest income. 22. We further find the assessee before the CIT(A) has given the following details and contended that in the earlier years and subsequent years the interest income and interest expenditure was allowed for netting off. ” ITA Nos.2926 to 2930/Del/2024 13 | P a g e 8. We accordingly adopt the above extracted detailed discussion mutatis mutandis to uphold the learned CIT(A)/NFAC impugned findings allowing the netting benefit to the assessee. The Revenue fails in its instant “lead” appeal ITA No. 2926/Del/2024 as well as in its remaining four appeals ITA Nos. 2927, 2928, 2929 & 2930/Del/2024 in very terms. No other ground or argument has been pressed before us. 9. These Revenue’s five appeals ITA Nos. 2926, 2927, 2928, 2929 & 2930/Del/2024 are dismissed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 25th April, 2025 Sd/- Sd/- (MANISH AGARWAL) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25th April, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "