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2013 (9) TMI 597 - AT - Income TaxAllowability of interest expenditure – Business nexus of the amount borrowing – Amount borrowed to be utilized in the business of the assessee - Assessee had maintained cash balances at its several branches being in angadia business – Held that:- Reliance has been placed upon the judgments in the cases s.a. Asst.CIT vs. M/s.Patel Ambalal Hargovandas & Co [2013 (9) TMI 594 - ITAT AHMEDABAD] ACIT vs. Shri Vasantlal Ambalal Patel [2013 (9) TMI 593 - ITAT AHMEDABAD] - It was alleged by the Revenue Department that the borrowed money was kept as cash in hand and borrowed money was not in fact utilised for the purpose of the business - It could be a possibility that the assessee might be imprudent in holding large amount of cash but when this act of the assessee is to be visualized vis-à-vis the business activity, then the allegation of the Revenue Department appears to be a conjuncture. Otherwise also, the outstanding cash is nothing but a business asset of the assessee. There is nothing illegal to maintain cash at various branches - It was not objected by the AO that claim of expenditure was not genuine - No fallacy in the view taken by the ld.CIT(A) that merely because the assessee had maintained cash balances at its several branches being in angadia business should not be a cause of disallowance of interest on borrowed funds – Decided against the Revenue.
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