TMI Blog2018 (1) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... cial statements placed at page 15 of the paper book evidences the same. Para 10 of his written submission deals with the arguments raised without prejudice and praying for restricting the disallowance only to ₹ 88,46,924/-, the difference of the interest incurred and interest earned by the assessee. Considering the peculiar facts of this case and subject to verification of the figures by the AO, restricting the disallowance to the said amount of ₹ 88,46,924/- should meet both ends of justice. - ITA No. 1587/PUN/2015 - - - Dated:- 17-1-2018 - SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM Appellant by : Shri Nikhil Pathak Respondent by : Shri Mukesh Jha, JCIT-DR ORDER PER D. KARUNAKARA RAO, AM This appeal is filed by the assessee against the order of CIT(A)-I, Pune dated 07-09-2015 for the Assessment Year 2011-12. 2. Before us, Ld. AR for the assessee submitted that Ground No.1 constitutes substantive ground. Ground Nos. 2 to 6 merely support the Ground No.1 by way of arguments. Therefore, Ground No.1 being substantive in nature, which relates to the disallowance of interest claim, is extracted here as under : 1. The Ld.CIT(A) er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the details of interest expenditure and interest income. Drawing our attention to the profit and loss account placed at page 15 of the paper book, Ld. AR submitted that the total interest income earned by the assessee as per Schedule 7 works out to ₹ 1,83,18,830/-. Per Contra, the financial expenditure incurred by the assessee as per Schedule 9 works out to ₹ 2,77,75,031/-. The interest expenditure is more than interest income as the assessee did not receive any interest as the said ₹ 25 crores of loans utilized for giving trade advance to the Vishwaroop Infotech Pvt. Ltd. (supra). Explaining the interest expenditure paid to the Indiabulls on the loans of ₹ 25 crores taken on 17-09-2010 and also ₹ 30 crores taken on 08-01-2011, Ld. AR for the assessee submitted that all the funds were utilized in the context of the said transaction of acquisition of land and therefore the expenditure is entirely allowable as business expenditure u/s.36(1)(iii) of the Act. 6. Further, without prejudice to the above, Ld. AR for the assessee submitted that the above expenditure at the maximum can be set off against the interest earnings. The addition, if any, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constraints in raising the balance funds, the assessee decided to purchase the land in the LLP named Bluerays Developers LLP wherein the assessee was a partner having 50% of the share and the balance 50% was owned by Shri Atul Chordia and Zero G Apartments Pvt. Ltd. [an entity of Atul Chordia Group. The said LLP was constituted on 20.09.2010 i.e. after the advance was paid by the assessee to Vishwaroop. 9. Now, the lower authorities have held that the amount advanced by the assessee was not for its business. The assessee submits that it intended to purchase the land from Vishwaroop which is not related to it and therefore, the advance was paid. Secondly, the assessee had never admitted before the A.O. that there was no written documents. Thirdly, the lower authorities have not appreciated that ultimately, the land was purchased by Bluerays in which the assessee company was a partner. It is not a case that the land deal did not materialize. Thus, considering the subsequent events of formation of the LLP and acquisition of land by the LLP, the bona fides of the assessee can be proved that the amount advanced to Vishwaroop was for purchase of land and it was not a mere advance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said interest claimed is attributable to the borrowed loans of ₹ 25 crores from Indiabulls which was never utilized for the business purposes, i.e. for acquisition of the aforementioned land. The non submission or absence of documentation-MOU and the Deed of Cancellation and subsequent purchase of the said land by M/s. Bluerays Developers LLP constitutes the circumstantial evidence/events in favour of the Revenue. 10. On the other hand, the case of the assessee is that the said land belongs to Vishwaroop Infotech Pvt. Ltd., and the assessee could not complete the transaction due to paucity of funds. Therefore, in view of the shortage of finance, assessee had to incorporate a Limited Liability Partnership (in short LLP ) with Panchsheel/Atul Chordia group. These subsequent events support the assessee s claim that the loan of ₹ 25 crores received from Indiabulls was paid to Vishwaroop Infotech Pvt. Ltd., for business purposes only. The failure of the assessee to file the MOU and the Deed of Cancellation are not due to non-existence of the documents. The event of transfer of the said loan from Indiabulls to Vishwaroop Infotech Pvt. Ltd., is a matter of fact and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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