Offsetting of interest paid under Section 57 against interest income

Facts: 

Assessee deriving house property income had pledged her property and lent those monies commercially and earned interest. She claimed interest expense under Section 57 against the interest income earned also under income from other sources. Similar stands and acts were done by the assessee in earlier years as well and on consistent basis. For the said assessment year the AO chose to disallow the interest paid citing it was not proximate or arising out of the said income earned. On higher appeal -

Held in favour of the assessee that the interest expense be allowed as an offset against the interest income. The principle of res judicata does not apply to income tax proceedings but out of consistency the same deserves to he honoured.

Ed. Note: The simple tax structuring is worth noting.

Case: Namita Aggarwal v. ITO 2023 TaxPub(DT) 1114 (Del-Trib)