2021 (4) TMI 665

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....ty. 2. The appeal for AY 2014-15 contest the order of learned Commissioner of Income Tax (Appeals)-12, Mumbai [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-12/ACIT- 6(1)(3)/445/2016-17 dated 12/03/2019 qua deleting addition of interest disallowance of Rs. 398.52 Lacs. The assessment for the year under consideration was framed by Ld. Assessing Officer u/s 143(3) on 27/12/2016. The assessee being resident corporate assessee is stated to be engaged in development of infrastructure projects. 3. We have carefully heard the rival submissions and perused relevant material on record including the orders of lower authorities. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 4.1 The impu....

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....al matrix as well as assessee's financial statements and deleted the disallowance with following findings and observations: - 3.4 I have carefully gone through the assessment order and the submissions of the assessee. Prior to MOU and transfer of GBL loan to the assessee, BEBCL was earning interest and paying tax thereon. It is seen that BEBCL transferred the Lohegaon project receipts and expenses to the assessee company. It is also seen that BEBCL also transferred the loan given to the GBL to the books of the assessee along with equal amount of liability on which the assessee was liable to pay interest to BEBCL. The interest earned from the GBL has a direct nexus with funds of BEBCL for which the appellant paid interest. This has ....

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....tain assets as well as liabilities delved upon assessee pursuant to agreement dated 30/03/2013 with its holding company wherein it was agreed that Lohegaon project would be carried out by the assessee. The differential of assets and liabilities was treated as loan from M/s BEBL to the assessee for which the assessee paid interest expenditure of Rs. 398.52 Lacs during the year. The assessee also earned interest income of Rs. 423.17 Lacs from loan granted by its holding company to M/s GBL which was also transferred to the assessee under the said agreement. The net interest, thus earned, has been offered to tax. We find that there is clear nexus between the interest income as well as interest expenditure. As rightly noted by Ld. CIT(A), it was....