Tax exemption on loan against prop

Case study... pls help....Assessee is an individual and a partner in a firm and recd interest from that firm approx 50 lakh. He had also taken loan against property so interest paid on loan for Rs. 50 was adjusted from interest recd as stated before. Is interest expenditure allowed in this case. Next If he has not used that loan for business purpose, can we disallow adjustment from interest recd u/s 37(1)