TMI Blog2015 (11) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... and Brahma Associates. The Ld. Departmental Representative could not controvert the above factual finding given by the CIT(A). Further, the finding of the Ld.CIT(A) that the miscellaneous expenditure in the ledger account contains the entire details of expenditure which includes the interest expenditure and also the receipt of interest and dividend for F.Y. 2001-02 wherein the journal entries 447 and 448 are also mentioned could not be controverted by the Ld. Departmental Representative. The submission of the Ld. Counsel for the assessee before us that the loan obtained from the bank and given to the various concerns are back to back transactions could not be controverted by the Ld. Departmental Representative. In view of the above and in view of the detailed reasoning given by the Ld.CIT(A) we find no infirmity in his order. - Decided against revenue - ITA No. 133/PN/2014 - - - Dated:- 30-11-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For the Appellant: Shri Kishor Phadke For the Respondent: Shri Rajesh Damor, CIT ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 18-09-2013 of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the AO to decide the issue after affording opportunity to the assessee to establish nexus between the receipt and payments as per the details made available before us in the chart and after hearing the assessee in this regard. The additional grounds No.2 and 3 are thus allowed for statistical purposes. 5. The AO thereafter on the basis of the direction given by the Tribunal asked the assessee to make its submissions. The assessee vide letter dated 21-05-2012 submitted that it had obtained loan of ₹ 5,00,00,000/- from Rupee Co-operative Bank Ltd. This loan was in turn advanced to M/s. Brahma Finance Corporation. The assessee submitted a chart showing the details of amounts due to bank and amounts due from M/s. Brahma Finance Corporation, statement of Rupee Cooperative Bank Ltd. for financial year 2001-02 2002-03 and ledger account of Brahma Finance Corporation in the books of Brahma Associates for F. Y. 2000-01 to 2002-03. It was contended that there is a direct nexus between the loan borrowed from the bank and the amount advanced to M/s. Brahma Finance Corporation. On this premise, the assessee requested to tax the net interest only. The assessee furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such nexus can be found only to the extent of ₹ 38,19,238/-. The balance expenditure on account of interest is treated as expenditure incurred in the normal course of business in the absence of any findings to the contrary. On the other hand, the balance amount of interest earned, i.e. ₹ 1,09,94,741/- (-) ₹ 38,19,238/- = ₹ 71,75,503/- is treated as income from other sources as per the directions of the Hon ble ITAT. Even otherwise, on examination of the ledger account of the interest expenditure, it is clear that an amount of ₹ 61,71,506/- being miscellaneous expenditure has been debited as interest expenditure. This categorization of the assessee is not acceptable because the actual nature of said expense is found to be certain miscellaneous expenses. 6. Based on the above discussion an amount of ₹ 71,75,503/- is treated as income from other sources because no direct nexus between the borrowed funds, loans given, interest expenditure incurred and interest earned could be established. Further, the dividend amount of ₹ 8,000/- is also taxed under the head income from other sources because it has no direct nexus with the eligible busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Bank Ltd was stated to be in turn advanced to M/s Bramha Finance Corporation. The appellant further states that during the F.Yrs. 2000-01 and 2001-02 the occupancy certificate from the PMC was not obtained due to the construction being incomplete, the expenditure on account of administrative, selling and other expenses were transferred to Misc. expenditure and reflected as 'current assets' in the balance-sheet. The appellant also filed the journal vouchers for the two financial years reflecting the transfer of various expenses to misc. expenditure and also the ledger extract of the misc expenditure in support of the claim. The appellant has also filed the aforesaid details during the appellate proceedings. The appellant has thus emphasized that the total interest paid during the two year was of ₹ 61,71,506/- (Rs. 9425/-) during AY. 2001-02 and ₹ 61,62,081/- during AY. 2002-03) whereas the total interest earned was of ₹ 59,28,843/- on the amounts out of bank loan advanced to Bramha Finance Corporation upto 31-3-2002. The appellant has contended that the aforesaid entries appearing in the balance sheet as at 31-3-2001 and 31-03-2002 indicates direct nexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made by the appellant has been duly considered and material on record perused. It is noticed that the Assessing Officer has considered the ledger account for the F.Y. 2002-03 of M/s. Brahma Associates whereby the interest accrued to the appellant of ₹ 38,19,238/- during the financial year 2002-03 has been taken into consideration whereas the other entries appearing in the ledger account has not been considered by the Assessing Officer so far as the receipt of interest is concerned. The Assessing Officer, however, has admitted to the fact of the amounts borrowed from Rupee Co-op Bank Ltd to have been advanced to M/s Bramha Finance Corporation and hence the nexus between the two has not been disputed. However, the Assessing Officer has considered out of the total receipt of interest of ₹ 1,09,94,741/-, a sum of ₹ 38,19,238/- only and the remaining amount of ₹ 71,75,503/- has not been considered for set off. The Assessing Officer in fact has not examined the entire details furnished by the appellant and has been guided by the heading of the expenses such as advertisement/Misc. expenditure and has concluded that interest expenditure includes number of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Commissioner of Income-tax (Appeals) erred in holding that the amount of interest received from Brahma Finance Corporation amounting to ₹ 59,20,843/- and that of Brahma Builders of ₹ 12,54,660/- ought to have been considered for giving the set off when there is no direct nexus between the loan taken from Rupee Co-op. Bank Ltd. And amount advanced to Brahma Finance Corporation and Brahma Builders. 4. The learned Commissioner of Income-tax (Appeals) erred in holding that the amount of interest received from Bramha Builders of ₹ 12,54,660/- ought to have been considered for giving the set off even though the assessee had not produced any details or evidences to establish the nexus at any stage. 5. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 9. The Ld. Departmental Representative strongly opposed the order of the CIT(A). Referring to the bank statement filed by the assessee in the paper book he submitted that there are certain cash withdrawals through self-cheque, therefore, entire loan has not been diverted to Brahma Finance Corporation as claimed. Referring to page 201 of the paper book the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits also. Further, the assessee has not withdrawn any borrowed funds and it has withdrawn only from the capital of the assessee. He accordingly submitted that the order of the CIT(A) being in accordance with law should be upheld and the grounds raised by the Revenue should be dismissed. 11. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. The only dispute that has to be decided in the impugned appeal is regarding allowability of the interest income of ₹ 71,75,503/- from the interest expenditure on the basis of nexus between the interest expenditure and the interest income. From the details furnished by the assessee we find the assessee had shown interest income of ₹ 1,09,94,741/- and interest expenditure of ₹ 1,10,01,275/- for the financial year ending on 31- 03-2003. The AO in the assessment order held that the assessee could establish such nexus only to the extent of R.38,19,238/-. He, therefore, treated the balance interest income of ₹ 71,75,503/-, [i.e. ₹ 1,09,94,741/- (-) ₹ 38,19,238/-] as income from other sources and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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