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2014 (5) TMI 314 - AT - Income TaxDisallowance of interest Nexus between interest free loans out of interest bearing funds Held that:- The assessee has given interest free loan to various persons - The availability of various interest free loans and funds have also been provided which goes to show that at the year-end such interest free loans were at Rs. 29,76,48,648 CIT(A) has held that interest free loan is out of these funds only - findings of the CIT(A) appears to be prima-facie correct - during the month of April 2005 itself, the assessee has received huge interest free loans which aggregated to more than Rs. 50 crores - a presumption can be drawn that the interest free loan has been given out of these interest free unsecured loans received by the assessee thus, there is no reason to interfere in the order of the CIT(A). The assessee has also given huge loans which are interest bearing and on which the assessee had shown interest income of Rs. 1.96 crores - The interest which has been incurred for the purpose of the business, has been shown at Rs. 1.83 crores, which has been claimed as deduction u/s 36(1)(iii) - Such a claim of deduction cannot be disallowed, unless it has been shown that the assessee has actually diverted its interest bearing loan either for some non-business purpose of for personal use - There is no diversion of interest bearing loan for any other purpose except for the purpose of the business Decided against Revenue. the claim of the assessee under section 36(1)(iii) cannot be disallowed. Thus, the finding and the conclusion drawn by the learned Commissioner (Appeals) appears to be factually and legally correct and we decline to interfere in the matter as such. Thus, the ground raised by the Revenue is dismissed.
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