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2019 (1) TMI 1258 - AT - Income TaxDisallowance of interest on loan availed - surplus funds available from the loan taken from the consortium of Banks were parked by the assessee with the State Government - Held that:- The loan of ₹ 285 crores availed from the consortium of four Nationalised Banks was partly invested by the assessee in FDRs and the balance amount was provided to the Government of Sikkim as per the mutual understanding. In respect of the loan availed from The loan of ₹ 285 crores availed from the consortium of four Nationalised Banks was partly invested by the assessee in FDRs and the balance amount was provided to the Government of Sikkim as per the mutual understanding.he consortium of four Nationalised Banks, the assessee had paid interest of ₹ 27,10,50,225/- and had also incurred processing charges and guarantee fees amounting to ₹ 3,74,20,576/-. As against this total expenditure incurred in respect of the loan availed from the consortium of Banks amounting to ₹ 30,84,70,801/-, the assessee had received interest on investment made in Fixed Deposits out of the said loan to the extent of ₹ 5,48,37,553/ and the balance amount of ₹ 25,36,33,248/- was charged to the State Government as per the mutual understanding/agreement. It was thus a case wherein the surplus funds available from the loan taken from the consortium of Banks were parked by the assessee with the State Government and since the entire expenditure incurred by the assessee in the form of interest and other charges on the loans availed from the consortium of Banks was recovered by the assessee in the form of interest on Bank deposits as well as interest charged to the State Government, we find ourselves in agreement with the CIT(Appeals) that the disallowance made by the AO on account of interest was not sustainable. - Decided in favour of assessee
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