TaxTMI 
TaxTMI 
2016 (5) TMI 405
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....he grounds inter alia that :- "1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on account of bogus purchase of Rs. 26,86,130/- without appreciating the facts on the basis of which addition was made by the AO. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on account of interest paid on borrowed capital amounting to Rs. 35,43,206/- without appreciating the facts on the basis of which addition was made by the AO. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on account of interest paid on borrowed capital amounting to Rs. 35....
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.....12.2011 after issuance of show-cause notice dated 27.12.2011 to the assessee. Finding the reply filed by the assessee not tenable, the AO treated the total purchase of Rs. 26,86,130/- as bogus purchases and made an addition of Rs. 26,86,130/-. 3. In the profit and loss account, assessee claimed profits and gains from the business and profession to the tune of Rs. 18,00,975/- after deducting interest on personal capital. On failure of the assessee to substantiate the reason for the interest paid on the borrowed capital introduced by Smt. Suman Jain amounting to Rs. 35,42,206/- and failure to produce the evidences like bank statement, personal capital account, detail of interest paid, TDS return and payment challan, disallowed the amount of ....
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.... the paper book. 7. During appellate proceedings, the assessee has brought on record copies of accounts in the books of M/s. Sandip Enterprises, proprietorship concern of Smt. Suman Jain showing complete detail of business transaction with M/s. Sumit Agriculture Industries for the financial year 2008-09 and the said documents are lying at page 7 & 23 of the paper book. Assessee also produced purchase bills, stock register to prove the delivery, copy of bank accounts to prove the payment, lying in the paper book, which have not been disputed by the revenue. 8. Since the AO has merely proceeded to make an addition of Rs. 26,86,130/- on the basis of letter dated 19.12.2011, wherein M/s. Sumit Agriculture Industries denied business transa....
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....rores having been invested in the proprietorship concern, namely, M/s. Sandip Enterprises through capital account of assessee was sanctioned at lower rate on the ground that the assessee has substantial cause to prove the documents in additional evidence. Keeping in view the fact that the document sought to be proved by the assessee in additional evidence are necessary for complete adjudication of the controversy at hand, the same are allowed to be proved in additional evidence without prejudice to the merits of the case. Consequently, the application for additional evidence is hereby allowed. 10. Assessee in the profit & loss account claimed the interest having been paid to the tune of Rs. 35,43,206/- which has been disallowed by the AO....
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....e invested through the capital account of Smt. Suman Jain in M/s. Sandeep Enterprises." 12. In the backdrop of the aforesaid facts and circumstances, the sole question arises for determination is, "as to whether interest paid on capital borrowed by the assessee in individual capacity, for the purpose of business is eligible for deduction?" 13. Undisputedly, assessee raised the loan of Rs. 3.33 crores and Rs. 3.31 crores. Assessee claimed deduction of interest of Rs. 35,43,206/- on her individual borrowing against profit of Rs. 53,44,181/- of the proprietorship firm of M/s. Sandip Enterprises, a proprietorship concern of the assessee. 14. Undisputedly, during the assessment proceedings, the assessee produced her capital account for ....
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....l issue in the judgment cited as Indian Cements Ltd. vs. 60 ITR 52 (SC) wherein it has been held that when the act of borrowing money was incidental to carrying on the business the loan obtained was not an asset or an advantage of enduring nature, the expenditure was made for securing the use of money for a certain period and it was irrelevant to consider the object with which the loan was taken. 17. In the instant case, when from the document produced before the AO, CIT (A) as well as in the additional evidence before the Tribunal by the assessee, it is proved that the loan amount borrowed by the assessee in individual capacity was utilized for earning profit from M/s. Sandip Enterprises, a proprietorship concern of the assessee, a dire....