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2019 (2) TMI 1862 - AT - Income TaxDisallowance u/s 36(1)(iii) - interest on borrowed capital on the ground of diversion of borrowed funds - Addition holding non business purpose - HELD THAT:- perused the joint development agreement entered between appellant and the said M/s. TIPL, wherein we do not find any stipulation that appellant has to pay interest free advances to the said company. Furthermore, the said joint development agreement is not a registered document. It is also a matter of record that the said payment was treated as a deemed dividend in the hands of M/s. TIPL. However, the contention of the ld. Counsel that it result in double taxation in the hands of both cannot be accepted, as in the present case, what was disallowed was only the interest claim. Thus, the appellant had failed to establish the business expediency in advancing the money to the holding company. The onus always will be on the assessee to satisfy the AO that the loans raised by the appellant were used for its business purpose. Failure to discharge his onus would result into the disallowance of interest claim as held by the Hon’ble Punjab & Haryana High Court in the case of Abhishek Industries 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT - Decided against assessee.
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