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TMI Blog2014 (9) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing question stated to be a substantial question of law:- "Whether the Tribunal erred in concurring to the views of the CIT (A) in deleting the entire disallowances made by the Assessing Officer of Rs. 41,41,474/= on account of interest expenses, when the loan was not utilized for the purpose of business ?" 2. The facts stated briefly are that during the course of scrutiny proceedings, the Assessing Officer noted that assessee was engaged in the business of trading in Isabgul and finance. During the year under consideration, the assessee had obtained a loan of Rs. 3,29,89,999/- for purchase of Isabgul whereas in the entire year, the assessee had not made any purchases of Isabgul. The assessee had earned interest income of Rs. 27,96,313 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the other businesses, but neither any of the transaction has been claimed to be bogus by the Assessing Officer nor any specific defect pointed out. Mere fact that funds obtained for running one business having got mixed with the funds of other business and therefore the possibility of been utilized for other business would not lead to disallowed of interest payable on the bank funds, to the extent such funds were used commercially, for one or the other business of the appellant. 2.3.5 As far as the issue of diversion of such funds to the advances having lower rate of interest is concerned, the same also does not appear to be quite justified. As stated earlier, the bank funds have merged with the non-bank funds of the appellant, the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2.3.9 Therefore, to sum up, the Assessing Officer's stand appears to be not well founded and neither any disallowance is called for out of the bank interest, on the reason that the same has not been utilized for the purpose of business nor do the facts lead to any direct or indirect disallowance of the interest paid and received in the sarafi business on the ground of diversion of funds towards lower interest advances. Hence the disallowance of Rs. 41,41,474/- is deleted. This is, however, subject to verification of interest paid and received from partners at the appeal effect stage, as per provisions of Section 40(b)(iv). The appellant gets the relief to the extent." 5. The Tribunal, in the impugned order, has agreed with the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rafi business of the assessee was bogus. In view of the aforesaid facts we find no reason to interfere with the order of CIT(A). Thus this ground of Revenue is dismissed." 6. Thus, both the Commissioner (Appeals) as well as the Appellate Tribunal have recorded concurrent findings of fact to the effect that the assessee was also running a sarafi business and the funds obtained from the bank had got merged with the funds of other businesses. Having regard to the total funds available from the sarafi business, the Tribunal has found no reason to believe that bank funds have been diverted as interest free/lower interest advances. Moreover, no material has been brought on record by the revenue either to demonstrate that the sarafi business was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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