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TMI Blog2021 (10) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 346 - DELHI HIGH COURT ] hold that no disallowance of interest in the instant case is called for - Therefore, set aside the order of the CIT(A) and direct the AO to delete the addition. The ground raised by the assessee is accordingly allowed. - ITA No. 6822/Del/2019 - - - Dated:- 14-10-2021 - SHRI R. K. PANDA, ACCOUNTANT MEMBER Assessee by : Shri Pulkit Saini, CA Revenue by : Shri R. K. Gupta, Sr. DR ORDER This appeal filed by the assessee is directed against the order dated 11th June, 2019 of the CIT(A)-1, New Delhi, relating to Assessment Year 2016-17. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the CIT(A) in confirming the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc. which is not yielding any income. Since the assessee company, according to the AO, could not establish the nexus of the opening balance of interest bearing loans taken and failed to prove the genuineness of the claim of interest expenses for business purpose, the AO disallowed interest of ₹ 30 lakhs and added the same to the total income of the assessee. 5. In appeal, the ld.CIT(A) upheld the action of the AO by observing as under:- 7.1 I have carefully considered the assessment order and written submissions filed by the Ld. AR. During the course of the appellate proceedings, Ld. AR has stated that the appellant is in the business of finance investment, the interest paid is exclusively for earning interest income. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has shown loss of ₹ 10,88,271/- for AY 2016-17. The assessment order reveals that the appellant company is not doing any genuine business activity. Considering the facts of the case, I am of the view that the payment of interest of ₹ 30,00,000/- is not for the purpose of any genuine business activity. Accordingly, the disallowance of interest of ₹ 30,00,000/- u/s 36(1)(iii) is upheld. Ground No. 2 3 are decided against the appellant. 6. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 7. The ld. Counsel for the assessee, at the outset, submitted that the own capital and free reserves of the assessee company is ₹ 5.05 crores whereas the investment in shares is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous other decisions. 8. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that since the CIT(A) has given proper justification for sustaining the addition of ₹ 30 lakhs, therefore, the same should be upheld and the grounds raised by the assessee should be dismissed. 9. I have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find, the AO, in the instant case, made addition of ₹ 30 lakhs on the ground that the assessee has taken loan from DJ Group on which interest of ₹ 30 lakhs has been paid. According to the AO, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be controverted by the ld. DR. The submission before the CIT(A) that the assessee is in the business of finance and investment and the interest paid is exclusively for earning interest income also could not be controverted by the ld. DR. 11. I find, the Hon ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd. (supra) while dismissing the appeal filed by the Revenue has observed as under:- Held, dismissing the appeal, that the financial health of the assessee never be a criterion to judge the allowability of an expense; there was no authority for that. So long as the expenditure or payment had been demonstrated to have been incurred or laid out for the purposes of business, it was no concern of the Transfer Pricing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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