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TMI Blog2016 (1) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... ween borrowed funds and the investment made by the assessee and further huge interest expenditure was disallowed by the Assessing Officer against which no appeal was filed by the assessee, meaning thereby, the same was accepted by the assessee. 2. During hearing of this appeal, the ld. DR, Shri Samir Tekriwal, advanced arguments which are identical to the ground raised. The crux of argument is that onus was upon the assessee to show that the advances for acquiring the fixed asset was out of own funds more specifically when the funds were mixed up. On the other hand, the ld. counsel for the assessee, Shri B.V. Jhaveri, contended that it may be a good case for quantum but not of penalty and even the Assessing Officer has not recorded his sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment made in shares as the expenses were incurred out of common pool funds and further the assessee has maintained composite books of accounts for taxable as well as exempt income. It was also found that the assessee paid interest of Rs. 27,80,056/- on overdraft account and Rs. 13,89,28,290/- on working capital availed from bank. In view of these facts, the assessee was asked to provide computation of deduction u/s 14A read with Rule 8D of the rules. In reply, the assessee claimed exemption in respect of income from units of various mutual funds of Rs. 41,59,586/- and dividend income of Rs. 3,18,500/- u/s 10(34) of the Act. It was also noticed that the assessee paid interest of Rs. 13,89,28,290/- on export/import working capital avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes, therefore, penalty was imposed u/s 271(1)(c) for concealing the income/furnishing inaccurate particulars of such income. On appeal, before the ld. Commissioner of Income Tax (Appeals), the penalty was deleted against which the Revenue is in appeal before this Tribunal. 2.2. If the observation made in the assessment order/penalty order, leading to addition made to the total income/imposition of penalty, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that the assessee has taken huge borrowed funds on which substantial amount of interest of Rs. 14.17 crores was paid to the bank. It is also note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned with respect to diversion of funds which can be directly linked with the investment of property. The facts are clearly indicate that in spite of specifically asking by the Assessing Officer, the assessee never proved the nexus, therefore, we find merit in the contention of the ld. DR. Even otherwise, as per section 36(1)(iii) of the Act, legislative amendment was made by the Finance Act, 2003 by adding a new proviso inserted w.e.f. 01/04/2004 to provide that the amount of interest, paid in respect of capital borrowed for the purposes of business or profession, it has been specifically provided that any amount of interest paid, in respect of capital borrowed for acquisition of asset for extension of existing business or professi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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