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2012 (5) TMI 415 - ITAT, MUMBAIInterest of unsecured loans - utilization of borrowed funds - business nexus - Held that:- A.O. has wrongly considered the amounts as on 31.03.2004 for making the disallowance on the basis of the statement of affairs without examining the fund flow or the payment of interest - A.O. has not made out a proper case for disallowance under section 36(1)(iii) by examining the funds borrowed on which interest was paid and its utilization in the business on which interest was claimed - A.O. also has not considered the interest received from some of the advances in calculating the proportionate disallowance - Appeal is allowed by way of remand the matter back to the file of the A.O. by setting aside the orders to examine assessee's contentions and to obtain a fund flow statement and see whether the borrowed funds were diverted for non-business purposes
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