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TMI Blog2024 (11) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is against the order of Ld. CIT(A) deleting the addition of Rs. 5,18,27,770/- as made by the AO on account of disallowance of interest paid. 3. The facts in brief are that the assessee filed its return of income on 30.10.2018 declaring gross income of Rs. 1,44,27,515/- which was selected for complete scrutiny. The AO issued notices u/s. 143(2) and 142(1) of the Act along with questionnaire which was duly replied by the assessee. The AO observed on the basis of evidences filed by the assessee that assessee had paid interest to the tune of Rs. 5,18,27,770/- on borrowed money whereas he has not charged any interest on the loan given to various parties and accordingly, show cause notice was given which was not replied by the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as held by Hon'ble ITAT Chennai in Ranjani Enterprises (P.) Ltd. vs. ITO [2022] 139 taxmann.com 208 (Chennai - Trib.). In the instance case, Ld. AO could have invoked the provisions of sec.36(1 ) (iii) to hold that the borrowed capital was not used for the purposes of business or profession. However, the same has not been done and the provisions of sec.36(1)(iii) have not been invoked for the simple reason that the entire borrowed capital (loans) were used for advancing loans as a part of business. Rather, the AO has disallowed entire interest expenditure without questioning the genuineness of such expenditure. Therefore, the action of the AO, in disallowing the entire interest expenses on the pretext that interest has not been charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (P.) Ltd. v. CIT [2015] 63 taxmann.com 308/379 1TR 347. 8.9 I find that the ratio of the above decisions is applicable to the facts of the case considering the arguments of the appellant that not charging of interest on loans advanced to certain entities in purely based on business/commercial expediency. Viewed from any angle, the addition as made by the AO is not sustainable. I hold accordingly. The AO is directed to re-compute appellant's income by deleting the impugned addition. The ground of appeal no. 3 stands allowed in terms of my above decision." 4. After hearing the rival contentions and perusing the material on record including the appellate order passed by Ld. CIT(A) we observe that the assessee has incurred interest ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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