TMI Blog2019 (2) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments of the assessee in light of certain evidences. It is the case of the AO that the assessee has diverted interest bearing funds for non business purposes, but the assessee claims that the loan taken from Citibank has been partially funded for business purpose and partially funded for acquisition of property. Notice that the assessee has taken a proposition in the light of the decision in the case of CIT vs Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein held that when mixed funds are available, a general presumption goes in favour of the assessee that loans and advances are out of interest free funds and no part of interest bearing funds has been used. Consequently, no interest expense has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudice to above, on the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in not appreciating that overdraft was raised in the business as some of the funds were employed to buy industrial units which were let out; and thus, interest if not allowable as business expense, was allowed against income from house property. 3. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in disallowing interest of ₹ 37,965 paid against loan from LIC and loan from HDFC without appreciating that the said loans were obtained in connection with acquisition of the industrial units. 2. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count for the year under consideration, the availability of own funds cannot be ignored when a detailed cash flow statement has been filed to prove the availability of own funds. 4. The Ld.CIT(A), after considering relevant submissions of the assessee held that assessee has used interest bearing funds to subsidise the investment made by wife for purchase of property and for making payments to Shri Sunil J Shah for an investment opportunity in Gujarat or for making payment for his residential property. Although, the assessee has raised specific loans for acquisition of purchase of property, claimed huge interest for its proprietory business without any relevance to loans borrowed for acquisition of property and business activity of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts, other interests and bank charges on the same. Further the assessee had not acquired any business asset also and the industrial units acquired by the assessee jointly with his wife have been merely let out. The income from the let out property is claimed as Income from House Property only. he has claimed one third of the interest in his income tax return. It was also mentioned that he had] taken a Joan of ₹ 1.10 crores from M/s Edleweiss Finance Investment Ltd jointly with his wife for the purchase of two industrial Galas and that the interest on the same has been claimed against income from house property proportionately. It was also claimed thai he has taken a loan of ₹ 35.50 Lacs against his residential premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other loans were purely used for the purpose of business from time to time and as a matter of fact that there are no new loan taken during the year, therefore, whatever interest paid on unsecured loan amounting to ₹ 2,43,251 cannot be disallowed. The Ld.counsel also took an argument in the light of decision of Hon ble Bombay High Court in the case of CIT vs Reliance Utilities Power Ltd (2009) 313 ITR 340 (Bom) to argue that when mixed funds are available, a general presumption goes in favour of the assessee that loans and advances are given out of own funds and no interest bearing funds are used for the purpose. Therefore, no disallowance can be made. 6. On the other hand, the Ld.DR strongly supporting the order of the Ld.CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of business and such loan has been taken in the previous financial year and which has nothing to do with acquisition of property. Therefore, the AO was erred in disallowing total interest expenses even though the funds have been partially used for business purpose and partially used for acquisition of properties. The assessee also has taken an alternative argument in the light of decision of Hon ble jurisdictional High Court in the case of CIT vs Reliance Utilities Powers Ltd (supra) for the proposition that when mixed funds are available, a general presumption goes in favour of the assessee that loans and advances are out of own funds. Consequently, no interest expense can be disallowed. 8. Having heard both the sides and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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