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TMI Blog2015 (10) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... was made and earned interest therefrom. We find that this aspect is not examined by the ld.CIT(A) whether the interest paid to the bank was towards the money deposited for the purpose of making FDR wherefrom the assessee has earned interest income. Therefore, the issue is remitted back to the file of ld.CIT(A) to decide it afresh and he is directed to verify whether the interest claimed as expenditure by the assessee has direct nexus to the amount deposited by the assessee for making FDR. If the amount so taken from the parties was not utilized for the purpose of making fixed deposit where from the assessee has earned the interest, under such circumstances, the assessee would not be entitled for deduction of the expenditure claimed u/s.57 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09. The Revenue has raised the following grounds of appeal:- 1) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 21,21,783/- made by the Assessing Officer being disallowance of interest expenses. 2) On the facts and in the circumstances of the case, the Ld.Commisioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 3) It is therefore, prayed that the order of the Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad may b set-aside and that of the order of the Assessing Officer be restored. 3. The only effective ground is against the deletion of addition of ₹ 21,21,783/- being disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest to such parties, namely, Mahima Trading Investment Pvt.Ltd. CMC (I) Pvt.Ltd. and SBI on OD account. The ld.CIT(A) deleted the addition by observing as under:- 2.3. Decision: I have carefully perused the penalty order and the written submission filed by the ld.AR of the appellant. The provisions of Section 57(iii) of the I.T.Act provides that the expenditure, not being in the nature of capital expenditure, laid out or expanded wholly and exclusively for the purpose of making or earning such income shall be allowed as deduction. The appellant has claimed that it has paid the interest on borrowings from banks which have been made from the FDR Accounts in the bank. There was nexus between the deposit and the borrowing. Verifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is clear from facts that there is an immediate and direct nexus between the interest paid and the interest received in all accounts. The appellant borrowed money from the companies in which he is a Director and made FDRs in the bank. Similarly, he had other FDRs in the State Bank of India and also borrowed some money from that account. Hence, there was clear interlinking of interest payment and interest received. Therefore, the interest payment made by the appellant would be allowable as deduction from the interest earned. Accordingly, the addition of ₹ 21,21,783/- made by the A.O. is deleted. 5.1. There is no dispute as regard to expenditure of interest incurred by the assessee. The interest has been incurred on the loan re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1. The only effective ground is against in confirming the addition of ₹ 3,25,724/- disallowed by the AO. The facts relating to this issue is that the assessee had claimed expenditure u/s.57 of the Act towards the interest paid to Mahima Trading Investments Pvt.Ltd., CMC(I) Pvt.Ltd. and SBI. The AO disallowed the interest expenses paid to SBI. In appeal, the ld.CIT(A) confirmed the addition. Now, the assessee is in appeal before us. 6.1. The ld.counsel for the assessee submitted that the ld.CIT(A) is not justified in confirming the addition made by the AO. He submitted that in earlier years, the ld.CIT(A) has allowed such expenditure. 7. We have heard the rival submissions, perused the material available on record and gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noted that the expenditure was allowed as a result of incorrect appreciation of fact while deciding the appeal. On the basis of correct appreciation of the facts, the claim of the appellant is not allowable. Therefore, the appeal order for A.Y. 2008-09 is not followed. 7.1. During the course of hearing, a query was raised by the Bench to the ld.counsel for the assessee as to when FDR was made and when the OD facilities from SBI was taken by the assessee. The ld.counsel for the assessee could not give any explanation as to whether the amount paid to SBI was towards the amount taken as loan for making the FDR. In the absence of such material, we do not find any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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