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2022 (3) TMI 827 - ITAT DELHIAddition towards interest expenses - borrowing money from related party (partnership firm) at higher rate of interest and lending the same at lower interest rate - CIT(A) upheld the additions restricting the interest expense only to the extent of income earned u/s 57 - HELD THAT:- Assessee is claiming interest paid as deduction from interest received on the ground that interest expenses were incurred wholly and exclusively for the purpose of earning interest income. We fail to understand this transaction of the assessee. The assessee is a practicing Chartered Accountant and is not engage in money laundering business. There is no dispute that the assessee has borrowed the money from his firm for the purposes of his profession. The assessee in his wisdom borrowed money at a higher rate of interest and lended the same at a lower rate of interest. AO should have disallowed the entire interest claimed by the assessee but we cannot improve the assessment order nor I can improve the order of the CIT(A). In my considered opinion borrowing money at a higher rate of interest from a related party and lending the same at lower rate of interest to an unrelated party defies all commercial prudence expected from a Chartered Accountant. Surrounding circumstances cannot be ignored. Appeal filed by the assessee is dismissed.
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