TMI Blog2021 (9) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed the appeal purely on the basis that the assessee failed to establish that borrowed fund was utilized for the purpose of business.As noticed even before CIT(A), it was submitted that the assessee had sufficient interest free fund available for making advances. It was also stated that since no tax free income is earned, hence no disallowance could be made. Lastly, it was also stated that the assessee is eligible for setting off interest earned and offered for taxation. Admittedly, no finding is recorded by the Ld.CIT(A) on these submissions. Revenue has not disputed the fact that the authorities below have not allowed set off of the interest earned and offered for tax. Moreover, the assessee has not earned any exempt income unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) on the ground that they are not applicable to the facts of the present case. c. as the disallowance also could not be made by referring to section 14A of the Act, which is applicable only if any tax-free income has been earned by the assessee. In the present case no interest free income has been earned by the assessee. 2. Without prejudice to the above and in the alternative, the disallowance of ₹ 46,29,509/- could not be made in its entirety and referring to the facts and circumstances of the case the interest earned by the assessee to the extent of ₹ 39,14,863/- is eligible for set-off against interest payment of ₹ 46,29,509/-. Thus, addition only to the extent of ₹ 7,14,646/- could be made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. The Assessing Officer disallowed the claim on the ground that the interest free loan was given to the related parties for non-business purposes. Therefore, he made addition of ₹ 46,29,509/- on account of disallowance of interest expenditure. 3. Aggrieved against this, the assessee preferred appeal before Ld. CIT(A) who after considering the submissions and material on records, sustained the addition. 4. Now, the assessee is in appeal before this Tribunal. 5. Ld. Counsel for the assessee, Sh. I. P. Bansal, Advocate, vehemently argued that the action of the authorities below is contrary to the judicial pronouncements. He submitted that the assessee was having sufficient interest free fund to give interest free loan. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d merely on the ground that the assessee is required to prove nexus between the interest free advances/loan given to the related parties; and thirdly without prejudice to other submissions, the interest earned by the assessee to the extent of ₹ 39,14,863/- is eligible for set off against interest payment of ₹ 49,29,509/-. Thus, the addition to the extent of ₹ 7,14,646/- could be made. However, the Ld.CIT(A) dismissed the appeal purely on the basis that the assessee failed to establish that borrowed fund was utilized for the purpose of business. It is noticed even before Ld.CIT(A), it was submitted that the assessee had sufficient interest free fund available for making advances. It was also stated that since no tax free in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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