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The ITAT upheld the CIT(A)'s decision allowing the assessee's claim for interest expenditure under section 57(iii), applying the rule of consistency. The AO's full disallowance of interest was found unjustified, particularly given the partial disallowance in AY 2011-12 for similar facts. The assessee demonstrated that funds were mixed but primarily used for income-generating activities, consistent with prior years' assessments. The tribunal accepted the assessee's calculation of proportionate disallowance amounting to Rs. 43.45 lakhs, reflecting fresh borrowings, while recognizing that the majority of borrowings related to earlier years. No material change in facts was established, and the AO's deviation from prior practice lacked justification. The appeal was allowed, confirming the CIT(A)'s order in favor of the assessee.
The ITAT upheld the CIT(A)'s decision allowing the assessee's claim for interest expenditure under section 57(iii), applying the rule of consistency. The AO's full disallowance of interest was found unjustified, particularly given the partial disallowance in AY 2011-12 for similar facts. The assessee demonstrated that funds were mixed but primarily used for income-generating activities, consistent with prior years' assessments. The tribunal accepted the assessee's calculation of proportionate disallowance amounting to Rs. 43.45 lakhs, reflecting fresh borrowings, while recognizing that the majority of borrowings related to earlier years. No material change in facts was established, and the AO's deviation from prior practice lacked justification. The appeal was allowed, confirming the CIT(A)'s order in favor of the assessee.
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