2014 (7) TMI 1038

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....ng cylinder. Assessee filed its revised return of income for A.Y. 07-08 on 11.08.2008 declaring total income of Rs. 1,12,93,900/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 18.12.2009 and the total income was determined at Rs. 1,25,19,317/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 16.12.2010 granted partial relief to the Assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and Assessee has also filed a C.O. The grounds raised by the Revenue reads as under:- 1.1 The Learned CIT(A)-VIII, Ahmedabad has erred in law and on facts in deleting the addition of Rs,12,25,417/- made by the Assessing Office....

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....me on money advanced at 10% was Rs. 11,65,959/-. He accordingly considered 3.5% of the interest expenses amounting to Rs. 12,25,417/- as being for non business purposes and disallowed the same. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under:- 4.1 . On the other hand, the Ld. A.R submitted before me that during the course of assessment proceedings, the appellant company vide its submission dated 14/12/2009 filed the complete details of advances given for purchase of land along with Xerox copy of Banakhat executed and source of advances to the A.O. However, the A.O. has not verified and considered the source of advances submitted before him which is against the princi....

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....ven for purchase of land and bank borrowings. The disallowance made by the learned A.O. on account of interest paid to bank is not at all sustainable because the appellant company has not borrowed any amount towards advance given for purchase of land. 4.2 It is observed from the assessment order that A.O failed to establish any nexus between interest bearing loans and advances given for purchase of land. The addition made by A.O appear to be on hypothetical basis, and do not have any legal foundation. The appellant has categorically established before A.O with facts and figures that no investment in land has been made out of interest bearing funds. 4.3 ...................... 4.4 4.4 In view of the details discussed held above and particu....