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2016 (10) TMI 1309 - AT - Income TaxDisallowance of interest expenses - addition being 2/3rd of interest expenditure claimed by the assessee - HELD THAT:- Assessee has failed to comply with the express directions of Tribunal. The question for adjudication has been whether deduction of the interest expenditure claimed by assessee was justified or not in terms of section 36(1)(iii) of the Act and in the attending facts and circumstances of the case. Assessee was to justify the business expediency under which he had to pay interest on the borrowed funds at the rate more than the interest received on the same funds advanced by the assessee. Several opportunities were given by the AO by issuing notices u/s. 143(2) along with questionnaire in terms of Tribunal’s directions but the assessee did not bother to comply with the notices issued to him. One of the submissions of the assessee has been that the loan was advanced at lower rate to Merlin Resources Pvt. Ltd. for a long period whereas the loan raised from Silverline Technologies Pvt. Ltd. was repaid in a short period. Assessee could not submit any evidence or any loan agreement before us in support of such contention nor could he lay any evidence to justify any business prospects by borrowing the funds at higher rate of interest and lending the said borrowed funds at lower rate of interest, particularly when the assessee was engaged in the business of financial services. There are also no previous or subsequent instances on record to prove such business practice of the assessee. Assessee failed to prove the business expediency, under which he chose to suffer loss in the business by paying much more interest on borrowed funds and by earning lesser interest on advancing the said borrowed funds. No justification to discard the conclusions of the authorities below regarding admissibility of inordinate interest expenditure claimed by assessee on borrowed funds. - Decided against assessee.
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