2015 (2) TMI 767

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..... vocate   HEMANT GUPTA, J. (ORAL) The Revenue is in appeal under Section 260 A of the Income Tax Act, 1961 (for short 'the Act') aggrieved against the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal') on 02.12.2003 relating to the assessment year 1994-95. The Revenue - appellant has raised the following substantial questions of law: .....

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..... , answered in favour of the revenue for the same reasons as are recorded therein. Now coming to the second substantial question of law, the Tribunal disallowed the interest amounting to Rs. 1,13,35,469/- on the amount of interest free loan advanced to M/s Gujarat Cycles Ltd. and M/s Majestic Auto Ltd. Such deduction was set aside by the Commissioner of Income Tax (Appeals) vide order dated 29.12. .....

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..... ere is nexus between the borrowed funds and the diversion thereof in the form of interest free loans. Unless any nexus is proved, no disallowance would be called for." The Revenue went in further appeal before the Tribunal. The Tribunal followed the earlier decision and set aside the disallowance made by the Assessing Officer. It may be noticed that the assessee was not in appeal against the orde .....

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