Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (4) TMI 1334 - ITAT DELHIDisallowance of interest as per proviso to sec. 36(1)(iii) - HELD THAT:- A bare perusal of the proviso to section 36(1)(iii) clearly reveals that there should be specific finding that the amount of interest paid is in respect of capital borrowed for acquisition of an asset for extension of existing business or profession. Therefore, direct nexus between the capital borrowed and the acquisition of asset has to be established before proviso can be invoked. In the present case the AO has not established this nexus. The proviso was wrongly invoked by him. Further, we find that it was specifically stated before the AO that there was introduction of fresh capital on which no claim of any interest had been made in the books. AO has not at all taken into consideration as to how this fund was utilized. Further, assessee has also pointed out that it had received interest free loan, which has been reproduced earlier. In any case, the assessee’s claim was that the entire borrowed funds had been utilized for business purposes and not for acquisition of fixed assets. In view of above discussion, we do not find any reason to interfere with the order of ld. CIT(A) and the same is upheld.
|