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TMI Blog2013 (6) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... an business. The mere contention that the borrowed funds were utilised for the purchase of Masoor Dhall from Sri Saravana Agency, per se, cannot be taken as a good ground to accept the plea of the assessee, considering the fact that consistently the advances given to the Directors had increased from Rs.3.23 crores to Rs.3.91 crores without corresponding return thereof and with no better performance in the business of the assessee. In the circumstances, the arguments placed by assessee rejected. As far as the reliance placed on the decision of CIT V. Kandagiri Spinning Mills Ltd [2007 (4) TMI 182 - MADRAS HIGH COURT] the same is distinguishable for the simple reason that the decision rested on the factual findings therein in that case by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be allowed as deduction on the basis of the submissions and evidences placed before it?" 2. The assessee is engaged in the business of export of beedi leaves and food grains. The assessee is also engaged in transport contracts. For the assessment year under consideration, the assessee declared a loss of Rs.3,71,680/-. When the assessment was taken up for scrutiny, it was found that the assessee had advanced loan to the Directors to a sum of Rs.3.91 crores as against what was given earlier at Rs.3.23 crores. The Assessing Officer viewed that the assessee had not utilised the borrowed funds for business purpose, but diverted the same for advancing loans to the Directors. Hence, the claim of interest payment is disallowed. Aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance was raised by the Assessing Officer from 6% to 10%, as had been agreed to by the assessee. In the circumstances, the question of grant of relief did not arise. On going through the remand report, the Commissioner of Income Tax (Appeals) rejected the appeal preferred by the assessee. Aggrieved by this, the assessee went on further appeal before the Income Tax Appellate Tribunal. 5. The assessee reiterated the same contentions before the Tribunal. On a consideration of the materials placed by the assessee, the Tribunal pointed out that the assessee had not proved before the Assessing Officer that the interest bearing borrowed funds were exclusively used for the business purpose and they have not diverted as by way of loan to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is purely one of fact. Except for stating that the assessee had made borrowal in the immediate preceding accounting year, no materials were placed before this Court or before any other authority to show that the borrowed funds were not diverted for any purpose other than business. The mere contention that the borrowed funds were utilised for the purchase of Masoor Dhall from Sri Saravana Agency, per se, cannot be taken as a good ground to accept the plea of the assessee, considering the fact that consistently the advances given to the Directors had increased from Rs.3.23 crores to Rs.3.91 crores without corresponding return thereof and with no better performance in the business of the assessee. In the circumstances, we reject the arg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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