TMI Blog2016 (12) TMI 1839X X X X Extracts X X X X X X X X Extracts X X X X ..... owing (or) loan or advance, as the case may be, there is no question of denying the benefit of deduction. In the case on hand, the interest amount has been actually paid by the assessee through Overdraft/Cash Credit account and the same has not been converted into loan or borrowing (or) loan or advance, as the case may be. These appeals are dismissed by answering the question of law against the Revenue and in favour of the assessee - ITA No.2230/Mum/2015 - - - Dated:- 7-12-2016 - SHRI D.KARUNAKARA RAO AND SHRI PAWAN SINGH, JJ. Appellant by : Mr. Saurabh Kumar Rai (DR) Respondent by : Mr. Vinay Mehta (AR) Order PAWAN SINGH, J. 1. This appeal by the Revenue filed u/s 253 of the Income-tax Act ( Act ) is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief facts of the case are that the assessee is engaged in manufacturing and processing blended solvents under the name of Proprietorship concern M/s. Crystal India , filed its return of income for relevant AY on 23.09.2011 declaring total income of ₹ 74,94,211/-. The assessment was completed u/s 143(3) of the Act on 28.02.2014. The Assessing Officer (AO) while framing the assessment disallowed the interest of ₹ 57,88,447/-claimed on OD/CC Account u/s 43B(d)/(e) r.w. Explanation 3D. On appeal before the ld. CIT(A), the addition made by AO by way of disallowance was deleted. Thus, aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before us. 3. At the outset, ld. AR of the assessee argued that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at ₹ 39,56,40,419/- and having closing balance of ₹ 2,80,24,975/-. The payments in respect of term loan were also paid. The ld. CIT(A) while considering the appeal of the assessee concluded as under: 7. I have carefully considered the facts of the ea e, the findings of the AO, the submissions of the AR of the appellant and material placed on record. As per the bank statement, it is seen that during the year under consideration, the bank had provided the following amount of interest against CC Account with UBI: Date Interest debited (Rs.) 30.04.2010 94,573 31.05.2010 84,967 30.06.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t said interest was not paid during the year and converted into loan, is not factually correct. 7.2. The contention of the AO that the interest has been converted into loan, on the ground that the balance in OD Account was always remained a debit balance, is not correct as the OD limit of the CC Account was increased from ₹ 1.5 crores to ₹ 3 crore, which was not considered by the AO. Since the Closing balance i.e. (-) ₹ 2.80 crores, as on 31.03.2011, in the OD Account is less than the OD limit of ₹ 3 crores, indicate that the same is on account of principle loan and not on account of interest. Considering the facts of the case in entirety, above discussion and respectfully following the above decisions quoted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually paid and any interest referred to in that clause which has been converted into a loan or borrowing shall not be deemed to have been actually paid. Explanation 3D.- For the removal of doubts, it is hereby declared that a deduction of any sum, being interest payable under clause (e) of this section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or advance shall not be deemed to have been actually paid. 5. The department declined to grant the benefit of deduction on interest paid primarily on the plea that the amount has not been actually paid and transfer of amount from one account to another account cannot be treated as paid. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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