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2013 (6) TMI 337 - HC - Income TaxInterest on borrowed funds - disallowance of claim on the ground that there was additional amount of advances given to directors, without any nexus being established between the borrowed funds and the advances made to Directors - Held that:- Except for stating that the assessee had made borrowal in the immediate preceding accounting year, no materials were placed before this Court or before any other authority to show that the borrowed funds were not diverted for any purpose other than business. The mere contention that the borrowed funds were utilised for the purchase of Masoor Dhall from Sri Saravana Agency, per se, cannot be taken as a good ground to accept the plea of the assessee, considering the fact that consistently the advances given to the Directors had increased from Rs.3.23 crores to Rs.3.91 crores without corresponding return thereof and with no better performance in the business of the assessee. In the circumstances, the arguments placed by assessee rejected. As far as the reliance placed on the decision of CIT V. Kandagiri Spinning Mills Ltd [2007 (4) TMI 182 - MADRAS HIGH COURT] the same is distinguishable for the simple reason that the decision rested on the factual findings therein in that case by the Commissioner of Income Tax (Appeals) as well as by the Tribunal. As rightly pointed out by the Tribunal, when the assessee had not showed any such nexus of the borrowed funds utilised in the business and continued to be used in the business, no hesitation in confirming the order of the Tribunal.
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