2006 (3) TMI 124

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....nd in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs. 12,33,625 on account of disallowance of interest under section 36(1)(iii) of the Income-tax Act, especially when the interest bearing fund was diverted for non-business purposes?" In short, the question that arises for consideration in this appeal filed by the Revenue is whether the Tribunal was justified in holding that the assessee is entitled to get the benefit of Rs. 12,33,625 by way of interest accrued on a particular transaction which the Assessing Officer had declined to grant to the assessee by adding the said amount in their total income in the assessment year 1995-96/1996-97. The assessee is a limited company engaged in....

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.... of interest in respect of capital borrowed for the purpose of business. It is against this finding of the Tribunal, the Revenue has come up in appeal. Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant and Shri S.R. Sarda, learned counsel for the respondent. Having heard learned counsel for the appellant and having perused the record of the case, we are inclined to dismiss the appeal and uphold the finding of the Tribunal recorded on the issue in question. This is how the Tribunal dealt with the issue in question in paragraph of the impugned order: "Paragraph 9.- We have considered the rival submissions carefully and have gone through the relevant material on record. We find forc....

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....which was entered into by a third party and Systematics Corporate Services Ltd. was intermediary in that transaction, it does not mean that the assessee cannot enter into any other transaction with that company. The current transaction is independent and is a genuine transaction as is evident from the various documents filed on record. In these circumstances, there is no justification of disallowance of interest for a transaction entered into for the purpose of business. Thus, we set aside the order of the learned Commissioner of Income-tax (Appeals) and delete this addition." A mere perusal of the aforesaid paragraph would indicate that the Tribunal went into the factual aspects of the case and having examined the factual documents brou....