TMI Blog2020 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... cess payment or outstanding. Once the accounts of these three directors were settled before the end of the financial year 2007-08 by utilizing the loan taken from the ICICI Bank, no disallowance on account of interest expenditure for the assessment years 2010-11 and 12-13 is called for. Since the entire loan amount availed by the assessee from ICICI Bank was finally utilized for repayment of the loans taken from the Directors before the end of the financial year 2007-08, then the issue was no more survived thereafter and consequently for the assessment year under consideration no disallowance is called for on account of interest expenditure. Accordingly, in the facts and circumstances of the case, we delete the disallowance made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s appeal. We further note that this ground was also not pressed before the ld. CIT (A). Accordingly, ground no. 1 of the assessee s appeal is dismissed being not pressed. Ground No. 2 is regarding disallowance of interest under section 24(b) of the IT Act. 3. The assessee is a company and filed its return of income on 28th September, 2010 at total income of ₹ 98,800/-. The return of income was initially processed under section 143(1) on 25.05.2011. Subsequently, the AO reopened the assessment on the ground that the assessee has claimed deduction under section 24(b) at ₹ 22,05,416/- on account of interest on borrowed capital whereas the said borrowed fund was not utilized for acquisition of the house property agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest on such loan is an allowable deduction under section 24(b). The ld. CIT (A) did not accept this contention of the assessee and confirmed the disallowance made by the AO on the similar reasoning that out of the loan amount, the assessee has utilized certain amount for excess payment to the Directors over and above the loan amount. 4. Before us, the ld. A/R of the assessee has submitted that the AO has considered the incorrect details of the loan and repayment of loan by the assessee to its Directors. He has referred to the details given by the AO at page 3 of the assessment order and submitted that the assessee has taken a loan of ₹ 53,50,000/- from Smt. Raj Kumari Agarwal which was repaid by the assessee by utilizing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Therefore, the disallowance made by the AO and confirmed by the ld. CIT (A) is liable to be deleted. 5. On the other hand, the ld. D/R has submitted that the AO has clearly pointed out some part of the loan taken by the assessee from the ICICI Bank was not utilized for repayment of the loan taken from the Directors but the amount was utilized for excess payment to the Directors and, therefore, to that extent the AO was justified in disallowing the proportionate interest claimed by the assessee under section 24(b) of the Act. She has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as the relevant material on record. The facts as emerged from the assessment order regarding the acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1,78,00,000 1,71,50,000 44,30,000 We find that the loan amount against Smt. Raj Kumari Agarwal is incorrectly shown at ₹ 30,00,000/- as against ₹ 53,50,000/-. This fact is verified from the relevant ledger account and we find that the loan amount was ₹ 53,50,000/- and the repayment was also of equal amount, therefore, there was no excess payment in case of Smt. Raj Kumari Agarwal whereas the AO has taken ₹ 23,50,000/- as excess payment. This is clearly an incorrect fact assumed by the assessee while making the disallowance. Even the details of loan and repayment against Shri Jugal Kishore are also wrongly mentioned by the AO. In the said tab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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