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2016 (6) TMI 420 - ITAT PUNEDisallowance of interest - AO disallowed the claim on the ground that the assessee had more than enough interest free funds, i.e. to the tune of ₹ 128.84 crores at its disposal whereas the ICD given to M/s. Kinetic Engineering was amounting to ₹ 30 crores only - Held that:- The assessee has not used the ICD from M/s. Jaya Hind Sciaky Ltd. for the purpose of its own business and the assessee could not establish the nexus of interest income with that of the interest expenditure. We find the CIT(A) rejecting the additional evidence filed before him upheld the action of the AO. The reasons given by CIT(A) have already been reproduced in the preceding paragraphs. As submitted by the assessee that there is a clear nexus between the ICD taken from M/s. Jaya Hind Sciaky Ltd. and given to M/s. Kinetic Engineering Ltd. which is routed through and reflected in the bank account. Although such evidence was filed during the course of hearing before CIT(A) he has not admitted the same on the ground that there was no prayer for admission of the additional evidence and there is no justifiable reason as to why the same was not filed during the assessment proceedings. Although the assessee has explained that there is direct nexus between the ICD taken from M/s. Jaya Hind Sciaky and given to M/s. Kinetic Engineering Ltd., however, it is a fact that such nexus was not explained properly before the AO and the CIT(A) has not accepted the additional evidence filed before him as mentioned earlier. Thus we deem it proper to restore the matter to the file of the AO with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction regarding the nexus of such ICDs taken and loan given and the nexus of interest income and the interest expenditure. - Decided in favour of assessee for statistical purposes.
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