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TMI Blog2014 (1) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the house property and has no nexus with the interest free advances made to sister concerns then no disallowance should be made from the interest payment. - ITA No.1325/Hyd/2010 - - - Dated:- 3-1-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Appellant : Sri D. V. Anjaneyulu For the Respondent : Shri Jeevanlal Lavidya ORDER Per Saktijit Dey, J.M: This appeal by the assessee is directed against the order dated 31-8-2010 passed in appeal No.449/DCIT 3(1)/CIT (A)-IV/09-10 pertaining to the assessment year 2007-08. 2. The only issue raised in the present appeal is disallowance of interest of Rs.35,59,820/-on the reasoning that the assessee has advanced interest free loan to the sister concern. 3. Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot out of loans obtained from financial institutions. It was submitted that during the year, the assessee had sufficient funds available in the form of share application money and reserves and surplus to the advances to the sister concern without utilising borrowed fund from financial institutions. He therefore submitted that no part of interest claim can be disallowed. In support of the same, assessee has relied upon the decision of SA Builders vs. CIT (288 ITR 1) (SC) and CIT vs. Ms. Sushma Kapoor (319 ITR 29) (Delhi). The CIT (A) however did not accept the contention of the assessee by holding that even though the assessee had shown only rental income but, still the assessee was required to establish that all the interest and financial c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars back and has started generating income and the entire term loan availed from SBI against which interest payment was claimed as deduction was utilised for the purpose of construction of the said house property. It was submitted by the learned AR that since the interest free advances made to the sister concern have no nexus with the borrowals made from financial institutions, disallowance of interest is totally uncalled for. The learned AR submitted that, the fact that the assessee had utilised the entire borrowed fund for construction of the house property can be verified by the Assessing Officer and requested for remitting the issue to the file of the Assessing Officer for this purpose. 7. The learned DR also had no objection if the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has not placed before us any documents to establish the fact that the interest bearing funds from financial institutions were not taken during the year and was not utilised for interest free advances given to the sister concern. There is nothing on record to show that the entire term loan taken was utilised for the construction of the house property. Therefore, in the absence of these facts, we are not in a position to record a finding either way with regard to the issue whether the interest bearing funds were utilised for the construction of the house property or not. Therefore, after considering the totality of facts and circumstances, we think it proper to remit the matter back to the file of the Assessing Officer to decide the is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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