TMI Blog2006 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 260A of the Income Tax Act, 1961 ('Act') is directed against the order dated 21.9.2005 passed by the Income Tax Appellate Tribunal('ITAT'), New Delhi in ITA No. 2926/2001 pertaining to Assessment Year 1997-98. 2. After hearing learned counsel for the parties, we admit the appeal and frame the following substantial question of law for the consideration of this Court: "Has the assessee discharged its burden of showing, for the purposes of claiming deduction on account of interest under Section 36(1)(iii), that the funds borrowed by it were utilized for the purpose of business and not given as interest free advances for non-business purposes and does not the matter require to be remanded to the Assessing Officer (AO) for examining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited. It had also, towards the end of the previous year, advanced Rs.11,42,500/- each to M/s. Esteem Apartment, Happy Days Properties Limited and Hind Land Private Limited respectively. The total outstanding amount from these parties as on 31.3.1997 was Rs. 3,88,43,500/-. While the assessee did not receive any interest or liquidated damages from any of these parties, it received Rs.5 lakhs from Krishna Estate Private Limited. The assessee claimed that it had paid interest of Rs.25,79,692/- to Delhi Brass and Metal Works Limited on the sum borrowed by the assessee. After allowing a deduction of Rs. 5 lakhs, which was received as liquidated damages, the AO disallowed the interest paid to the extent of Rs.20,79,692/-. After adding the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, affirming the Order of the CIT(A), deleting the disallowance of Rs.20,79,692/- on account of the interest paid by the assessee was not sustainable in law particularly since in terms of Section 36 (1)(iii) of the Act the onus of showing that the funds borrowed was for the purposes of its business had to be discharged by the assessee itself. He submits that assessee had failed to discharge this onus. The only inference that could be drawn was that the assessee had utilized the funds borrowed for giving interest free advances and and therefore, the CIT(A) and the ITAT were not justified in deleting the disallowance as ordered by the AO. 8. Dr. Rakesh Gupta, learned counsel for the assessee was unable to categorically state if in fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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