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TMI Blog2024 (3) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed - as per CIT(A) disallowance has to be worked out by taking the ratio of average interest bearing funds and the average total funds - HELD THAT:- The assessee has returned income Rs. 4.58 Cr. and had a capital of Rs. 25.69 Cr. and is also on fact that Rs. 7.96 Cr. has been invested in the partnership firm on which the assessee has earned income which has been duly offered to tax. Capital account of the assessee in the books of M/s B. K. Sales Corporation have been examined. After examination and verification, it is observed that the assessee had sufficient own funds to lend advance free loans and the loans received have been used for income earning purpose and such income earned has been offered to tax. Hence, we hold that no disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phold the action of the Learned Joint Commissioner of Income-Tax, Special Range -14, Delhi in restricting the disallowance on account of interest paid on Unsecured Loans to Rs. 57,69,219/- out of total interest paid at Rs. 91,05,072/- despite the fact that the confirmations in respect of interest paid to various parties were duly filed during the assessment proceedings. 2. That the order dated 09.12.2019 passed u/s 250(6) of the Act by the Learned Commissioner of Income-Tax (Appeals) -14, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Ld. Joint Commissioner of Income-Tax, Special Range-14, Delhi in framing the assessment by ignoring the basic principles of natural justice as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid was utilized for advancing loans for which no interest has been received, the total interest paid has been disallowed. The Assessing Officer has relied on the order of the Co-ordinate Bench of ITAT Hyderabad in the case of DCIT, Circle 3(2), Hyderabad Vs. M/s Suryavanshi Spinning Mills Ltd., Secunderabad that any deduction for interest paid on money borrowed from outsiders for making advances is not an allowable expenditure. The decision of the ITAT is reproduced as under: The sec 36(1)(iii) of the IT Act provides for deduction of interest on loans raised for business purposes. Once the assessee claims any such deduction, the onus will be on the assessee to satisfy the assessing officer that whatever loans were raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had enough interest free funds earned as remuneration and portion of profit from partnership firm, rental and other incomes to invest in equities in its group concerns and advance interest free sums to its sister concerns. The fact in such cases is that the advances and equity purchases are out of interest free funds. The funds of the assessee were sufficient to invest and cover the interest free advances made by him to its sister concerns. 9. The ld. DR submitted that once the funds have been utilized it should be deemed that the interest bearing funds have been given to the related concerns. It was argued that as interest free funds have already been utilized, the assessee has left with no option but to advance loans to the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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