TMI Blog1981 (8) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... re than their capital and, accordingly, he came to the conclusion that the loans borrowed by the assessee were not utilised for the purposes of the business. Consequently, interests claimed by the assessee were disallowed in these years. 3. The assessee came in appeal before the AAC for the asst. yr. 1974-75 and contended that the interest had been paid on the funds which were utilised for the purposes of the business of the assessee. The AAC did not agree and he further recorded a finding that the loans taken by the assessee were not genuine. 4. The assessee came in appeal before the Tribunal and the Tribunal vide its order in ITA. No. 186 (Pat) of 1978-79 set aside this issue to the file of the AAC. The Tribunal in its order in paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to the asst. yr. 1972-73. The ITO in his assessment order for the asst. yr. 1972-73 allowed the entire interest paid on the said loan after accepting the loan as genuine. Since the amounts were accepted by the ITO in the original assessment, the interest claimed was allowed. Therefore, there is no question of doubting these loans as ingenuine in the subsequent years and, accordingly, interests claimed by the assessee should be allowed. The AAC impressed with the arguments of the assessee and he, consequently, deleted the additions. The department is in appeal and the assessee has filed the cross objections. 6. Shri S. Prasad, the senior Deptl. Rep., filed a paper book disclosing the details of the parties to whom the interests had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook. The ITO was satisfied and, accordingly, no disallowance was made out of the interest claimed by the assessee which is evident from the order of the ITO for the asst. yr. 1972-73 appearing on pages 30 to 32 of the paper book. The counsel further stated that the assessee has not taken fresh loan during these years. The opening balances had been carried forward. The loans were taken only during the asst. yr. 1972-73 and they were utilised for the purposes of the business. This fact has been proved by the order of the ITO for the asst. yr. 1972-73. Under the above circumstances, both the points urged by the senior Deptl. Rep. had been fully answered. The loans had already been adjusted as genuine in 1972-73 and the loans had been utilised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed by the AAC as pointed out by the Senior Deptl. Rep. Therefore, it would be proper at this stage to clear of the clouds on these two points in order to appreciate the arguments of the parties. 10. There are no fresh loans during the years under appeal. This fact was accepted by both the parties in course of the arguments. The opening balances had been carried forward. The loans were taken in 1972 and the ITO has looked into the explanation of the assessee and had come to the conclusion that the loans are genuine. Therefore, the opening balances could not be said to be ingenuine when the original loans had been accepted as genuine in the asst. yr. 1972-73. However, even if the loans were accepted as genuine in 1972-73, the same m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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