TaxTMI 
TaxTMI 
2019 (9) TMI 862
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.... by the appellant. 4. Ld. CIT(A) erred in law and on facts not adjudicating ground challenging action of A.O. taxing interest income as 'Income from other sources' against 'income from business or profession' as offered by the appellant. 5. Ld. CIT(A) erred in law and on facts not adjudicating ground challenging action of A.O. not allowing legal & professional fees of Rs. 9,90,000/- as business expenses. 6. Ld. CIT(A) erred in law and on facts not adjudication ground challenging action of A.O. not allowing Rs. 3,55,806/- claimed as security charges. 7. Levy of interest u/s 234A/B/C & D of the Act is not justified. 8. Initiation of penalty proceedings u/s 271(1)(c) of the Act is not justified. 2. At the outset, Ld. Counsel for the assessee submitted that under the instructions of the assessee, the assessee does not wish to press ground Nos.4, 5 & 6. It is further submitted that ground No.7 & 8 are consequential in nature needs no separate adjudication. The ground unnumbered is general in nature would need no separate adjudication. Therefore, the ground Nos.4, 5 & 6 are dismissed as not pressed. Ground Nos.7 & 8 being consequential i....
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....o be a case to warrant disallowance of any interest. From the statements in the PNB A/c furnished during the appeal proceeding, it is clear that the contention of the appellant as to the sources of fund and the appropriation thereof is correct and no adverse inference could be drawn. The AO is directed to delete the addition of Rs. 9,18,078/- on disallowance of interest paid. The appeal succeeds on these grounds. 12.2 In connection with disallowance of interest expenditure of Rs. 9,67,285/-paid to India Infoline Financial Services Ltd.(llFSL) it is seen that the loan was taken by the appellant from IIFSL in November 2011 was directly advanced to Monalisa Infrastructure Pvt. Ltd. (MIPL) and the amount was received back in F.Y.2011-12 within a period of 5 months and another amount taken on loan by MIPL from IIFSL in May 2011 was repaid in November 2011 but the AO observed that the appellant had made payment of interest to IIFSL amounting to Rs. 23,08,120/- in A.Y. 2012-13, Rs. 43,92,977/- in A.Y. 2013-14 and Rs. 9,67,285/- in A.Y. 2014-15 and that if the amount was squared up, where was the necessity to pay the interest to IIFSL in the year other than A.Y. 2012-13. From the ....
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....f Rs. 9, 67, 285/- paid to M/s. India Infoline Financial Services Ltd. (IIFSL) that - xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 7.5 It is case, of the appellant that the verification of the Fund Flow Statements for the three years would reveal that the Appellant had mixed bag of funds i.e. own capital + interest free fund +\ interest bearing funds, the loan taken from M/s IIFSL is used for repayment of interest bearing loan taken earlier and thus, it is a case of loan takeover where one interest-bearing loan is replaced by another interest-bearing loan. Xxxxxxxxxxxxxxxxx,\xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxx,\xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxx,\xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxx,\xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 7.6 As per the AO, the appellant did not furnish any documentary evidence to prove that the loan taken from IIFSL and transferred directly to MIPL....
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....rials available on record and gone through the orders of the authorities below. We find that there is no change into facts and circumstances in respect of the assessment year 2012-13 and 2013-14 and the assessment year 2014-15 i.e. the year under consideration. The Ld. CIT(A) in respect of the assessment years 2012-13 & 2013-14 has allowed expenditure by holding as under: "7. I have perused the assessment orders and considered the appellant's submission. 7.1 During the course of assessment proceedings for A.Y. 2014-15, it was noticed by the AO that in the previous years relevant to A.Ys. 2012-13 and 2013-14, the appellant had claimed deduction of Rs. 52,00,618/- and Rs. 99,95,031/- against the interest income under other sources amounting to Rs. 2,47,19,137/- and Rs. 2,87,42,973/- respectively. The AO observed that the appellant had mainly claimed interest expenses payable to unsecured loan from M/s. India Infoline Financial Services Ltd. (IIFSL) against income from M/s. Neptune Infra Space Pvt. Ltd. (NISPL) in the previous years relevant to A.Y. 2012-13 and A.Y. 2013-14. The appellant had claimed interest expenses of Rs. 52,00,618/- for A.Y. 2012-13 which inc....
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....2012-13 was not allowable as deduction by virtue of provisions of section 14A. Further, the appellant kept paying the interest to IIFSL in subsequent years also, till the previous year relevant to A.Y. 2014-15 (i.e. Rs. 23,08,120/- in A.Y. 2012-13, Rs. 43,92,977/- in A.Y. 2013-14 and Rs. 9,67,285/- in A.Y. 2014-15). On the other hand, the appellant had claimed above expenditure against interest income from NISPL. Therefore, as per the AO, these interests for respective Assessment Years were not allowable as deduction. The AO accordingly disallowed the claim of deduction in the respective years. 7.2 During the assessment proceedings u/s.147 for the A.Y. 2012-13 and A.Y. 2013-14, it was submitted by the appellant that the appellant had given loan of Rs. 20,00,00,000/- from PNB Bank Account during F.Y. 2010-11 and had paid interest to parties from whom funds were borrowed and the loan given to NISPL was out of the borrowed fund. During the F.Y. 2011-12, the appellant gave further loan of Rs. 4.5 crores from the PNB account and the same was received back. The appellant had borrowed Rs. 4.29 crores from IIFSL and had also borrowed funds from MIPL, but during the year, ....
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....- > the appellant has claimed interest expenses payable of Rs. 52,00,618/-for A.Y. 2012-13 which included interest of Rs,23,08,120/- on loan from IIFSL and interest expense of Rs. 99,95,031/- for the A.Y. 2013-14 which included interest of Rs. 43,92,977/- on loan from IIFSL on unsecured loan of Rs. 4,27,64,647/- taken by the appellant from IIFSL on 04.11.2011, > in AY 2012-13 the unsecured loan of Rs. 4,27,64,647/- from IIFSL was taken by the appellant but on the direction of the appellant the entire amount from IIFSL went directly to the books of MIPL. Thus theappellant was borrower from IIFSL and MIPL became borrower from the appellant, > the disbursement of loan of Rs. 4.27,64,647/- to MIPL was in November 2011 which MIPL had returned in March 2012. > MIPL is one of the Companies in which the Appellant is shareholder/ Director. MIPL was in need of funds which led to giving the said loan ofRs. 4,27,64,647/-. > In AY 2012-13, the Appellant had received Rs. 2.00 crores from MIPL in his proprietary concern M/s. Varna Builders in the month of September 2011 for which MIPL had not charged any interest from the Appellant. Similarly, the Appe....