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TMI Blog2014 (3) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... umed that the interest bearing funds were used for making interest free advances to the group concern by the assessee - the addition made in this regard by the AO is not sustainable which was rightly deleted by the CIT(A) – thus, the order of the CIT(A) upheld – Decided against Revenue. - I.T.A.No.2028/Del/2013, I.T.A.No.2029/Del/2013, C.O. No. 65/Del/2014 - - - Dated:- 7-3-2014 - Shri G. D. Agrawal And Shri Chandra Mohan Garg,JJ. For the Appellant : Shri Gautam Jain For the Respondent : Shri R. S. Meena, C.I.T. DR ORDER Per Bench These appeals have been preferred by the Revenue against the order of Commissioner of Income Tax(A)-XXXI, New Delhi in Appeal No. 1205/11-12 (AY 2007-08) and Appeal No. 1222/11-12 (AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l perusal of assessment order, we observe that the Assessing Officer made impugned addition by holding that out of amount of interest paid on secured and unsecured loan, an amount of Rs. 9,36,947 is not allowable as eligible for deduction within the provisions of section 36(1)(ii) of the Act. The Commissioner of Income Tax(A) deleted the above addition with following observations:- 3.4.7 From the above facts it emerges that the total interest paid for the year was Rs. 9,48,549/-. Assessing Officer s action amounts to disallowing almost the entire interest expenditure ignoring the fact that assessee did charge interest to many others and earned interest of Rs. 15.79 lacs on such advances. It is also fact that the assessee has non-interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany (on which interest has been paid) were employed for making interest free advances. This is especially so because of the wide gap between total unsecured loan and the interest free funds available with the company. In view of this the action of the AO cannot be sustained. Therefore, the addition made on this issue of Rs. 9,36,947/- is deleted. 6. In the above set of facts and circumstances and from the assessment order, we clearly observe that the Assessing Officer had not established any nexus to show that the loans taken were directly lent as interest free advances to the group concerns and in the absence of such nexus, it is difficult to say that the interest expenditure is not related to the assessee s business. The Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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