Summary: The Mumbai Bench of the Income Tax Appellate Tribunal Mumbai in Ankur Chandulal Shah Vs ACIT examined whether interest paid on borrowed funds is deductible under section 57(iii) against interest income from loans advanced when intention and nexus are established. The assessee earned substantial interest from loans given to a company and funded those advances through borrowings from family and friends, paying interest thereon and offering only the net interest income to tax. The assessment was completed ex parte, disallowing the entire interest expenditure for alleged lack of nexus. (iii) The assessee offered only net interest income under “Income from Other Sources”. ITAT FindingsThe Tribunal noted that:(a) Interest income was undisputed and duly taxed.