Appellate Tribunal allows Assessee's appeal, orders deletion of disallowed amounts for commercial expediency.

The Appellate Tribunal allowed the appeals of the Assessee, directing the Assessing Officer to delete the disallowed amounts for both assessment years. The Tribunal found a direct nexus between the advancing of money to SSKI and the commercial expediency of the assessee, based on the company's business activities in the real estate sector. The Tribunal concluded that the revenue authorities erred in disallowing the interest expenses, emphasizing the legitimate purpose behind the loan transactions.

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Issues:
1. Disallowance of deduction for interest paid by the assessee on borrowing from HDFC Bank.
2. Whether there is a direct nexus between the advancing of money to SSKI and its commercial expediency.

Analysis:
1. The appeals by the Assessee against two separate orders of the ld. CIT(A)-VIII, Ahmedabad dated 07.08.2012 were disposed of by the Appellate Tribunal. The common grievance in both appeals related to the disallowance of deduction for interest paid on borrowing from HDFC Bank. The A.O found that the assessee utilized borrowed funds for non-business purposes, leading to the disallowance of interest expenses. The Tribunal directed the A.O to redecide the issue, considering whether the loan to SSKI was for commercial expediency. The assessee explained the purpose of the loan, but the A.O disallowed the interest expenses again, leading to an appeal before the Tribunal.

2. The Tribunal analyzed the Memorandum of Association of the assessee company, highlighting relevant clauses that supported the business transactions in question. It was noted that the company engaged in real estate business, as evidenced by its financial statements. The Tribunal found a direct nexus between the advancing of money to SSKI and the commercial expediency of the assessee. The Tribunal concluded that the revenue authorities erred in not accepting the assessee's contention and directed the A.O to delete the disallowed amounts for both assessment years. The appeals of the Assessee were allowed based on the established nexus between the business activities and the advancing of money.

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