Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (6) TMI 1149 - ITAT MUMBAIAllowability of interest expenditure u/s. 57(iii) - Held that:- The assessee’s funds have been mostly utilized for loans and advances to various parties from where the assessee has earned interest income of ₹ 16,22,79,443/-. The assessee has also paid interest on secured and unsecured loans. Once the funds have been utilised for giving loans and advances to the parties on which interest income has been earned,then ostensibly cost of funds in the form of interest payment has a direct nexus with the earning of such an income. We are unable to appreciate the blanket observation of the AO that funds lying with the assessee ware not identifiable and the assessee is unable to prove the nexus. Once, both the availability and application of funds are evident from the balance sheet, then there is apparently direct nexus between earning of income from deployment of funds and expenses incurred on cost of funds. Accordingly, the assessee is eligible for claim of interest expenditure u/s. 57(iii) and the same is directed to be allowed. Addition on difference between sale and purchase - addition stands enhanced by the ld. CIT(A) by taking 1% profit on the sales figure - Held that:- Such an enhancement by the ld. CIT(A) admittedly is without complying the mandatory requirement of subsection (2) of section 251 which provides that enhancement of income by first appellate authority cannot be made without giving notice to the assessee. Consequently, such an enhancement of income cannot be sustained. Accordingly, we direct the deletion of enhanced amount of ₹ 5,52,969/- and thus, ground no. 6 is allowed.
|