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2022 (2) TMI 862 - AT - Income TaxDisallowing interest payment on loan - Assessee failed to provide proofs and evidences thereof to support the utilization of such loan so that the interest paid can be treated as an eligible deduction - Assessee had failed to furnish justification as to on which account the interest was actually incurred in the year and also failed to submit the utilization of loan and why such interest was not paid or credited to the account of Matrix Cellular Services International in earlier years - HELD THAT:- As was the case during assessment proceedings, even during the appellate proceedings the assessee has failed to establish the nexus of the loan taken with the business - As submitted that the assessee company has earned interest income on loan and advances - interest on such loans and advances is less than 5%, whereas interest has been paid almost @10% on the loan taken - assessee has also failed to demonstrate the fund flow for paying of the loan on taking the loan from director. No cogent evidence has been submitted as to how the loan taken as well as the loan given was for business purposes. Payment of interest on the loans which have not been proved to be for business purpose and the waiver of the loan are not interrelated but are mutually exclusive In the instant case, the expenditure of interest for which the loan has been received has not been shown to be for the purpose of the business. We are not swayed by the observation of the Assessing Officer that earlier year, no interest has been paid but interest has been paid in the current year only. Even, before us, no evidences have been provided to prove that the loan received earlier was utilized for the business purpose which makes the interest paid or payable allowable under the provisions of Section 36(1)(vii). The arguments that there was no outgoing fund on the contrary, the assessee was a net gainer in form of waiver cannot be considered as a tenable claim.- Decided against assessee.
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