2015 (10) TMI 163

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....s are involved, these appeals were heard together and are being disposed of by way of this consolidated order for the sake of convenience. 2. First, we take up the Revenue's appeal in ITA No.2082/Ahd/2011 for AY 2008-09. The Revenue has raised the following grounds of appeal:- "1) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 21,21,783/- made by the Assessing Officer being disallowance of interest expenses. 2) On the facts and in the circumstances of the case, the Ld.Commisioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 3) It is therefore, prayed that the order of the Ld.Commissioner of Income-Tax (Appeals)-XI....

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....eposits. The interest income has come primarily from the State Bank of India. Against this income, the assessee has claimed an expenditure of Rs. 21,21,783/- as he had paid interest to such parties, namely, Mahima Trading & Investment Pvt.Ltd. CMC (I) Pvt.Ltd. and SBI on OD account. The ld.CIT(A) deleted the addition by observing as under:- "2.3. Decision: I have carefully perused the penalty order and the written submission filed by the ld.AR of the appellant. The provisions of Section 57(iii) of the I.T.Act provides that the expenditure, not being in the nature of capital expenditure, laid out or expanded wholly and exclusively for the purpose of making or earning such income shall be allowed as deduction. The appellant has claimed that....

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....d in all accounts. The appellant borrowed money from the companies in which he is a Director and made FDRs in the bank. Similarly, he had other FDRs in the State Bank of India and also borrowed some money from that account. Hence, there was clear interlinking of interest payment and interest received. Therefore, the interest payment made by the appellant would be allowable as deduction from the interest earned. Accordingly, the addition of Rs. 21,21,783/- made by the A.O. is deleted." 5.1. There is no dispute as regard to expenditure of interest incurred by the assessee. The interest has been incurred on the loan received from Mahima Trading & Investment Pvt.Ltd., CMC (I) Pvt.Ltd. and SBI on OD account. During the course of hearing, a quer....

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.... this issue is that the assessee had claimed expenditure u/s.57 of the Act towards the interest paid to Mahima Trading & Investments Pvt.Ltd., CMC(I) Pvt.Ltd. and SBI. The AO disallowed the interest expenses paid to SBI. In appeal, the ld.CIT(A) confirmed the addition. Now, the assessee is in appeal before us. 6.1. The ld.counsel for the assessee submitted that the ld.CIT(A) is not justified in confirming the addition made by the AO. He submitted that in earlier years, the ld.CIT(A) has allowed such expenditure. 7. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has confirmed the addition by observing as under:- "After consideri....