TaxTMI 
TaxTMI 
2018 (3) TMI 1033
X X X X Extracts X X X X
X X X X Extracts X X X X
....der consideration on 28.03.2013 declaring a loss of Rs. 25,93,498/-. In the said return, deduction of Rs. 53,46,249/- was claimed by the assessee on account of interest paid on borrowed funds. During the course of assessment proceedings, the assessee was called upon by the A.O. to establish the nexus between the interest bearing borrowed funds and her business activities. In reply, the following submissions were made by the assessee before the A.O.: "In response thereto assessee furnished a written submission stating inter alia: 'That the Dalmias namely your assessee Smt. Shyama Devi Dalmia and her husband Shri Kailash Pati Dalmia were having following individuals and companies under their control: 1. Smt. Shyama ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. The disallowance made by the A.O. on account of interest was challenged by the assessee in the appeal filed before the Ld. CIT(A) and the following submissions were made on behalf of the assessee in support of her case on the issue before the Ld. CIT(A): "3.1 That the assessee Mrs Shyama Devi Dalmia being an individual e-filed her Return of Income showing Net Loss of Rs. 25,93,498. The case was selected for scrutiny through CASS and Assessment Order was passed by the Income Tax Officer 31(4) vide order dated 2010212075. The Ld. Assessing Officer while passing the Assessment Order u/s 143(3) of the Income Tax Act, 1961 added following amount in the income of the Assessee: (a) Interest Paid Rs. 53,46,249/- (b) Cash....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame of Appellant Assessee to avoid any pilferage. 3.4 That the conclusion of the Ld. A.O. in his Assessment Order regarding claim of assessee for interest paid against loan taken on fixed deposits is erroneous. The Ld. A.O. stated in his order 'From the explanation as above, it is evident that the interest claimed to have been paid by the assessee has no nexus with the present activities of the assessee who has been earning interest income mainly from Bank/Other Deposits' 3.4 That the conclusion of the Ld. A.O. in his Assessment Order regarding claim of assessee for interest paid against loan taken on fixed deposits is erroneous. The Ld. A.O. stated in his order 3.5 That the Ld. A.O. failed to appreciate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Loan taken on fixed deposits from The Karur Vysya Bank Ltd. is squarely covered and settled in earlier year, the addition made by the Ld. A.O. is bad in law and we request your honour to provide relief to the Appellant Assessee accordingly." 5. The Ld. CIT(A) found merit in the submissions made on behalf of the assessee and deleted the disallowance made by the A.O. on account of interest by following the order of the Tribunal in assessee's own case dated April 24, 2014 in ITA No. 1588/Kol/2010 for A.Y. 2006-07on the similar issue. Aggrieved by the order of the Ld. CIT(A), revenue has preferred this appeal before the Tribunal. 6. We have heard the arguments of both the sides and also perused the relevant material available on record. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder : "If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. (supra) had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd, (supra) where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was ....