ITAT Allows Interest Deduction on Loan on House Property used by Directors for their residential purpose:

ITAT Allows Interest Deduction on Loan on House Property used by Directors for their residential purpose The assessee filed return of income 03 .01 .2017 declaring an income of Rs. 16,85 ,000/-. The assessee has claimed expenses on account of interest on property loan of Rs.40 ,70 ,286/- in P&L account. The AO disallowed the same on the grounds that it is not incurred for the purpose of business or profession. The AO has also mentioned that the purpose of loan was not clear whether it was for business or not. During the appellate proceedings, the assessee has submitted that it has taken loan for purchase of two residential properties which have been allotted to two Directors for their residential purposes. It was submitted that the perquisite value on account of residence has been accounted for in the income of the Directors and has been offered for taxation. The assessee has also submitted the purchase deeds which prove that the assessee has purchased the flats in the name of the company. The loan account being LB DEL 00002351776/ 2327 of ICICI Bank for the said property. The said building has been duly reflected in the schedule of fixed assets. The perquisite value has been duly taxed. Under these circumstances, we hold that the interest paid by the assessee company in connection with acquisition of fixed assets is an allowable deduction. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 16/12/2022.