2020 (5) TMI 674

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....ross Objections are common, they were heard together. 3. In ITA NO. 3131/Del/2016, following grounds have been raised by the department: "1. On the basis of the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the 50% addition of Rs. 4,70,59,275/- on account of addition made after disallowing of interest on working capital, without appreciating the fact that assessee itself had failed to prove that the said interest claimed on working capital was utilized wholly & exclusively for business purpose and also no TDS was deducted on the said interest payment." 4. In CO No. 239/Del/2016, following grounds have been raised by the assessee: "1. That the Ld. CIT (Appeal) erred in law in ....

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....has not been able to prove that these expenses were incurred wholly and exclusively for the purpose of business, the AO has disallowed 50% of these expenses amounting to Rs. 29,23,003/-. 7. Aggrieved the assessee filed appeal before the ld. CIT (A) who restricted the disallowance on account of interest to 50%. The revenue is in appeal against restricting disallowance to 50% and the assessee is in CO for confirming 50% of the disallowance on interest and against confirming the 50% of the bank charges. 8. A complete background of the issue is as under: 9. The assessee is primarily engaged in construction of highways and Infrastructure development on subcontract basis in India, promoted by its Malaysian associated enterprise, Bumi Hiw....

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....ring financial year 2006-07, the assessee received advances from BHV in order to repay its bank loan. These advances were arranged by BHV from its banker in Malaysia, CIMB Bank on which interest charges were paid by BHV. The actual interest paid by the BHV on the aforesaid loan procured from CIMB Bank was subsequently recharged by Company on cost to cost basis, without charging any mark up. It was argued before the ld. CIT (A) that the working capital term loan was utilized for day-to-day expenditure of the business, the interest claimed as business expenditure has to be allowed. 13. The ld. CIT (A) held that the major portion of the loan amount was utilized for investment in Swarna Toll Way Private Ltd's equity and as regards claim ....