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TMI Blog2016 (6) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... in the preceding paragraphs. As submitted by the assessee that there is a clear nexus between the ICD taken from M/s. Jaya Hind Sciaky Ltd. and given to M/s. Kinetic Engineering Ltd. which is routed through and reflected in the bank account. Although such evidence was filed during the course of hearing before CIT(A) he has not admitted the same on the ground that there was no prayer for admission of the additional evidence and there is no justifiable reason as to why the same was not filed during the assessment proceedings. Although the assessee has explained that there is direct nexus between the ICD taken from M/s. Jaya Hind Sciaky and given to M/s. Kinetic Engineering Ltd., however, it is a fact that such nexus was not explained pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ICD of ₹ 5 crores taken from its sister concern, M/s. Jaya Hind Sciaky. However, the AO on perusal of the details of unsecured loans accepted by the company during the year noticed that the assessee company has received unsecured loan from its Directors and their relatives and has not paid any interest on these unsecured loan of ₹ 128,81,01,051/-. Thus, according to the AO the assessee company had at its disposal interest free funds of ₹ 128,84,01,051/- and therefore, there was absolutely no reason to borrow funds whatsoever for the purpose of business or for any other reasons to the extent of this interest free funds available with the assessee. He, therefore, asked the assessee to explain as to why the interest expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should be admitted as additional evidence. The additional evidence filed by the appellant was forwarded to the Assessing Officer vide this office letter 12.04.2012. Subsequently, reminder in this regard was issued on 28.09.2013. However, no reply has been received from the office of the Assessing Officer in this regard. In view of the above position, it is held that the Assessing Officer has nothing to offer in this regard. Coming to the issue of admissibility of the additional evidence, it is seen that the appellant has not made any prayer for the admission of the same, stating the reasons as to why the same could not be produced before the Assessing Officer as copy of current A/c was very much available with the appellant while assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the Balance Sheet that as on 31.03.2007 inter-corporate deposit to Kinetic Engineering Ltd., was ₹ 16,19,18,434/- which has been reduced to ₹ 7,42,98,565/-. This being so, payment of ₹ 5 crores received from M/s. Jaya Hind Sciaky Ltd is merely a temporary transaction and not for investment purpose. This being so, the same cannot be allowed u/s.57 of Income-tax Act too as there is no nexus between interest earned and interest expenditure. Accordingly, I do not find any merit in the submissions of the appellant and the action of the Assessing Officer in disallowing ₹ 70,19,178/- is upheld. Thus, the ground is dismissed. 7. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 8. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and interest expenditure. Therefore, the order of the CIT(A) being a reasoned one should be upheld. 11. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the AO disallowed the interest expenditure of ₹ 70,19,178/- on the ground that the assessee had more than enough interest free funds, i.e. to the tune of ₹ 128.84 crores at its disposal whereas the ICD given to M/s. Kinetic Engineering was amounting to ₹ 30 crores only. The assessee has not used the ICD from M/s. Jaya Hind Sciaky Ltd. for the purpose of its own business and the assessee could not establish the nexus of interest income with that of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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