2021 (3) TMI 724

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....e assessee reads as under : 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in disallowing proportionate interest expense of Rs. 1,93,918/- claimed as a deduction u/s 36(1)(iii) of the Act. 3. Briefly stated, the facts of the case are that the assessee filed his return of income for the assessment year (AY) 2012-13 on 29.09.2012 declaring total income of Rs. 4,02,399/-. The dispute here is the disallowance of proportionate interest expense of Rs. 1,93,918/- made by the Assessing Officer (AO) u/s 36(1)(iii) of the Act. The AO made the said disallowance on the ground that the assessee had utilized directly or indirectly, its interest bearing funds for giving interes....

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....of the Act. The assessee had not established that on the date when each interest free loan were given, there were sufficient non-interest bearing or own capital funds was available with it to advance the same to others without charging interest and maintaining balances. As the assessee has failed to establish any nexus between the borrowings and the utilization of such funds for the business and has failed to establish the nexus between interest free loans, advances with available interest free funds. A.O. disallowed the proportionate interest on the total advances from the interest paid by the assessee. During appellate proceedings, in respect of this ground, assessee has filed the details as computation of income, personal Balanc....