Tribunal Rules in Favor of Assessee: Disallows Interest Expense, Deletes Unexplained Cash Additions, Adjusts Capital Gains Costs.

The Income Tax Appellate Tribunal (ITAT) decided the following: Disallowance of proportionate interest expenses was unjustified as the assessee had sufficient interest-free funds exceeding the non-income-generating investments. The Assessing Officer (AO) failed to establish a direct nexus between borrowed funds and investments, rendering the disallowance unsustainable. The Tribunal held in favor of the assessee on this issue. Additions u/s 68 for unexplained cash credits were deleted. The assessee explained the sources of cash deposits, including business receipts, pre-existing cash balances, and sale proceeds. The AO did not verify the lenders' creditworthiness, shifting the burden of proof to the Revenue. The Tribunal found the loans suff..... .....

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