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TMI Blog2016 (5) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of interest paid on borrowed capital - CIT(A) allowed the claim - Held that:- In the instant case, when from the document produced before the AO, CIT (A) as well as in the additional evidence before the Tribunal by the assessee, it is proved that the loan amount borrowed by the assessee in individual capacity was utilized for earning profit from M/s. Sandip Enterprises, a proprietorship concern of the assessee, a direct link has been established and as such, the interest cost incurred on the said personal borrowing was integral part of the earning profit in the said business. Moreover, when assessee has proved that borrowings taken in individual capacity was on lower bank interest of 0.25% BPLR as against regular rate of 1.75% BPLR it has certainly enhanced the profit of M/s. Sandip Enterprises also and in such circumstances, the interest amount of ₹ 35,43,206/- has been rightly allowed to be deducted by the CIT (A). So we find no illegality or infirmity in the finding returned by the CIT (A) and consequently, grounds determined against the revenue. - ITA No.3008/Del./2013 - - - Dated:- 30-3-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT and SHRI KULDIP SINGH, JUDICIAL MEMBE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess with the assessee. Pursuant to the show-cause notice, the assessee submitted copy of M/s. Sumit Agriculture Industries showing sundry creditor balance of ₹ 18,88,028/- dated 28.12.2011 on 30.12.2011, which shows that M/s. Sumit Agriculture Industries has been pressurized to change its own reply dated 19.12.2011 after issuance of show-cause notice dated 27.12.2011 to the assessee. Finding the reply filed by the assessee not tenable, the AO treated the total purchase of ₹ 26,86,130/- as bogus purchases and made an addition of ₹ 26,86,130/-. 3. In the profit and loss account, assessee claimed profits and gains from the business and profession to the tune of ₹ 18,00,975/- after deducting interest on personal capital. On failure of the assessee to substantiate the reason for the interest paid on the borrowed capital introduced by Smt. Suman Jain amounting to ₹ 35,42,206/- and failure to produce the evidences like bank statement, personal capital account, detail of interest paid, TDS return and payment challan, disallowed the amount of ₹ 35,43,206/- and thereby made the addition of ₹ 35,43,206/-. 4. Assessee carried the matter before the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been got rectified by the assessee during the appellate proceedings by producing the entire record of M/s. Sandip Enterprises referred hereinbefore. In the given circumstances, there is no question of issuance of second letter dated 28.12.2011 by M/s. Sandip Enterprises confirming all the business transaction with assessee under pressure. Had the notice u/s 133(6) of the Act been issued to M/s. Sumit Agriculture Industries seeking complete business transaction with M/s. Sandip Enterprises, the incorrect information would not have been filed by M/s. Sumit Agriculture Industries. So, we find no infirmity or irregularity in the findings returned by the ld. CIT (A). Hence, ground no.1 is determined against the revenue. GROUNDS NO.2 3 9. Before taking up the grounds no.2 3 for adjudication, we deem it necessary to dispose of the application filed by the assessee for leading additional evidence. Applicant/assessee, Smt. Suman Jain by moving an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 sought to prove on record bank proposal and sanction letter dated 10.11.2006 of Bank of India by way of additional evidence in order to prove the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that Smt. Suman Jain had sufficient Capital in the Balance sheet of M/s Sandeep Enterprises and it is for this reason that the loans raised by Smt. Suman Jain in the personal saving bank account were invested through the capital account of Smt. Suman Jain in M/s. Sandeep Enterprises. 12. In the backdrop of the aforesaid facts and circumstances, the sole question arises for determination is, as to whether interest paid on capital borrowed by the assessee in individual capacity, for the purpose of business is eligible for deduction? 13. Undisputedly, assessee raised the loan of ₹ 3.33 crores and ₹ 3.31 crores. Assessee claimed deduction of interest of ₹ 35,43,206/- on her individual borrowing against profit of ₹ 53,44,181/- of the proprietorship firm of M/s. Sandip Enterprises, a proprietorship concern of the assessee. 14. Undisputedly, during the assessment proceedings, the assessee produced her capital account for financial year 2008-09, datewise saving account for the assessment year 2008-09, confirmation from 32 lenders as on 31.03.2009 lying at pages 248, 63 65, 66 91, 31 62 of the paper book respectively. Assessee also produced stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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