9911796707
TMI Blog2020 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... le against business income in the facts and circumstances of the case. 3. The brief facts relating to the case on hand are that the assessee is a partnership firm reported income from business and other sources. The assessee filed return of income declaring total income of Rs. 24,06,250/-, on scrutiny the AO accepted the return of income vide its order dated 31-03-2010 passed u/s. 143(3) of the Act. The said assessment was reopened, acording to the AO, the assessee received interest income of Rs. 2,08,49,311/-, out of which interest of Rs. 2,07,18,311/- earned on loans and advances given to its associate concerns is not business income and held the same as income from other sources. An amount of Rs. 1,31,000/- from flat holders is only bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advancement of loans was not possible unless the Appellant borrowed the amounts from the bank. The Appellant has also contended that, the interest paid by the Appellant is for the purpose of earning of interest and therefore, the interest paid needs to be set off against the interest earned. 5.5 I tend to agree with the Appellant. The Appellant has been able to prima-facie establish that, the Appellant has been earning interest by utilizing borrowed money and hence, interest paid on such borrowing would be allowable deduction u/s 57(iii). Though, the AO has considered the income earned from interest under the head 'Income from Other Sources', the AO has not considered this claim of the Appellant regarding the interest paid. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilized for the actual business of assessee but the funds to an extent of Rs. 27.48 crores is a mixed fund consisting of borrowed funds and partners capital balances. 6. Having heard both parties and on perusal of the record, we note that the assessee itself admitted the borrowed funds were not utilized for the purpose of business for which they were obtained. Admittedly, the assessee borrowed funds to an extent of Rs. 7.63 crores under the scheme term loan facility. The assessee did not file any document to show on what condition the bank has granted said amount under the scheme term loan facility. However, we note that the assessee admitted before the two lower authorities that the term loan has been obtained for the purpose of business ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
