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2013 (6) TMI 69 - HC - Income TaxInterest on account of investment in shares disallowed - set off of interest received with interest paid - business purpose - AO found that amount borrowed is not used for business purpose but used to lend the money to directors - ITAT allowed the claim - Held that:- A perusal of the entire order of the tribunal demonstrates that it had proceeded on wrong assumption of fact that the assessee is in the business of investment in shares and there is no dispute that the purchase of shares of Rs.2 crores of Agmo Tex Ltd. was for the purpose of its business. On the aforesaid wrong assumption of facts, the Tribunal had proceeded to place reliance on certain judgements of the Apex Court and of this court and had thereafter jumped to the conclusion that even if the investment in shares had not yielded any income, the interest payable on the borrowed amount is to be allowed as business expenditure u/s. 36(1)(iii). It is clear that the entire approach of the Tribunal is manifestly illegal as it wrongly assumed that the assessee is in the business of investment in shares with not referring to any material in this regard. There is no finding that in the previous years, the assessee has ever made investments in shares of any company, or had earned profit or loss therefrom. Tribunal had totally glossed over the main controversy between the parties & failed to notice the reasoning given by the AO and CIT(A) in holding that the investment by the assessee in the shares of M/s. Agmo Tex Ltd. is not in connection with its own business but to extend financial support to it in which the assessee himself is the Managing Director. Order of the tribunal deleting the addition cannot be sustained - question of law answered in favour of the revenue.
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