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TMI Blog2022 (11) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... , unlawful and against the principles of natural justice. 2. The Ld. CIT(A) has grievously erred in law and/or on facts in misinterpreting the provisions of section 36(1)(iii) and confirming the disallowance of interest expenditure of Rs.21,57,962/-. 3. The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned disallowance. 4. Without prejudice to the above submissions, it is submitted that the whole of the interest expenditure is allowable as business expenditure u/s.36(1)(iii). Considering all the above submissions, your good self is requested to delete the said disallowance of interest of Rs.21,57,962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of business. Therefore, the said borrowings are only for conducting normal course of business. Interest income of Rs.5,00,174/- was earned from various loans and advances and the assessee is following accounting policy by maintaining the books of account thereby showing Profit & Loss, interest income earned and land trading as business income. Ld. AR further submitted that the Assessing Officer wrongly calculated interest on at 4.36% as the interest earned is always on time period of loans and advances given to the respective persons hence calculating the interest with the closing outstanding is a loan method. In the present case rate of interest earned is at 6% per annum from the respective period of loans given and the outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of trading stock. As out of the borrowed fund of Rs.4,21,25,540, the secured loan of Rs.6,05,877/- was specifically and directly utilised for the purpose of purchase of car, and Rs.56,09,043/- was interest free unsecured loans and hence unsecured loan of Rs.3,59,10,620/- on which interest was paid during the year under consideration were utilised for the purpose of business of land trading and money lending. As against outstanding interest-bearing borrowed funds of Rs.3,59,10,620/- there is outstanding of interest-bearing of loans and advances of Rs.1,14,52,340/- and hence the net outstanding interest-bearing borrowed funds are Rs.2,44,58,280/-. As against the same, the closing stock of land is Rs.2,86,27,278/- and hence total business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in respect of lands sold reflected in the opening stock and land which was not sold at the closing stock and various unsecured loans borrowed were utilised during the course of normal business of land trading and financial business. Thus, the Assessing Officer and the CIT(A) was not right in disallowing the interest of Rs.21,57,962/- and has not taken proper cognisance of the provisions of Section 36(1)(iii) of the Act. Thus, ground nos.1 & 2 are allowed. 8. As regards ground nos.3 & 4, the same are without prejudice and related to evidences produced by the assessee which does not require adjudication at this juncture. Hence, appeal of the assessee is allowed. 9. In the result, appeal of the assessee is allowed. Order pronounced i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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