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During the year under consideration, assessee has taken loan from NBFCs @14% (Chola Mangalam Investment & Finance Ltd.), Fullerton India Credit Co. Ltd. and GE Capital) for the purpose of making investment. However, due to non-materialization of deal the available funds of the assessee were invested by him in Fixed Deposit @9%, so as to earn interest income from the same. The assessee earned interest income amounting to Rs. 16,17,144/- and incurred interest expenses amounting to Rs. 25,94,468/- on account of loans taken from following NBFCs, resulting in the net interest loss of Rs. 9,77,324/- Revenue authority has not doubted the nexus between the loan taken from NBFCs and the amount invested in FDR is not doubted by the Assessing Officer. It is a settled law that the deduction u/s. 57(iii) of the Act will be allowable even if no income is earned by the assessee u/s. 56 of the Act. The language of section 57(iii) of the act does not anywhere specifies that any income should have been earned as a result of the expenditure incurred. It only specified that the purpose of expenditure should be that of earning income, it is mandatory that income should have been earned by the assessee. Keeping in view the facts and circumstances of the presentcase, that the addition in dispute is contrary to law and facts on the file and therefore, the same is hereby deleted

Sec. 57(iii) of Income Tax Act, 1961—Business Loss - If the expenditure in question is not allowable as a business expenditure, then the interest expenditure is allowable as a deduction u/s 57(iii) of the Act. During the year under consideration, the assessee had earned interest on FDR amounting to Rs. 13,41,303/- and a total expenditure on interest on loan and bank interest amounting to Rs. 14,90,125/- As per the language of section 57(iii) of the Act, the expenditure which is wholly and exclusively incurred for the purpose of earning income chargeable under the head income from other sources, is allowed as deduction from the said income of the assessee. Thus, it can be concluded that there is a direct nexus between the income earned and the expenditure incurred which should allowable as a deduction u/s 57(iii) of the Act. The addition made by the AD and sustained by the CIT(A) is deleted by allowing the grounds raised by the assessee. - SURESH CHAND AGRAWAL V/s ASSTT. CIT - [2020] 23 ITCD Online 125 (ITAT-DELHI)