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TMI Blog2024 (5) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... l produced by the appellant that would clearly suggest that the loan amount availed by it during the assessment year in question had been used for purchasing an asset, which it had used for the purposes of its business as a provider of asset management services. The evidence that was available before the authorities below clearly pointed to the acquisition of agricultural land valued at Rs.5,91,52,500/- and the earning of agricultural income through the sale of tapioca to the tune of Rs.1,93,540/- during the said period. Thus, notwithstanding the fact that the land in question was shown as a business asset in the balance sheet of the company, the fact remains that there was no evidence to show that the land was used for the purposes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income, the assessing officer disallowed a sum of Rs.90,73,279/- being the interest that was paid by the appellant on long-term borrowings. The disallowance by the assessing authority was on the ground that the loan amount in question was used by the appellant for purchasing land worth Rs.5,91,52,500/-, which was an agricultural land and on which the appellant had cultivated tapioca. The assessing authority therefore found that, in as much as the loan on which interest liability had arisen, was used for purchasing agricultural and earning agricultural income, the interest expense incurred on the loan amount availed could not be allowed as an expense under Section 36 of the Income Tax Act since it was not used for business purposes. 3. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. However, there was no iota of evidence to show that the land was used for the purpose of the business of the assessee. On the contrary, it was used for agricultural purpose which yielded agricultural income which is exempt from income tax under section 10(1) of the I.T. Act. The assessee has not placed any evidence to show that the land had been used for the purpose of business. The assessee might have shown the agricultural land in its balance sheet as business asset but nothing has been proven on record to show that the assessee was at all using the said land for business activities and as such merely showing the agricultural land in the balance sheet as business asset is not enough to prove the contention of the assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse incurred by way of interest paid on capital borrowed, to the extent of Rs.90,73,279/- was not eligible to be allowed under Sec.36(1) (iii) of the Income Tax Act, 1961? ii) Whether on the facts and in the circumstances of the case, has not the Tribunal misdirected itself in holding that the interest expense incurred was for earning exempt agricultural income and hence was not an allowable deduction, purportedly under Sec.14A, instead of addressing the real issue as to whether the appellant is entitled to claim the interest expenses paid on borrowed capital as a deduction under Sec. 36(1)(iii) of the Income Tax Act, 1961? 6. We have heard Sri.Mohan Pullikkal, the learned counsel for the appellant and Sri.Christopher Abraham, the learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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