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2022 (9) TMI 884

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....TAT erred in upholding the order of Commissioner Income Tax (Appeals) ['CIT(A)'] and deleted the disallowance of interest expenditure, amounting to Rs.2,79,11,315/- made by the Assessing Officer ('AO'), without considering the correct factual position that the borrowed funds advanced by the Assessee to the Contract Bottling Units ('CBUs') were not used by the Assessee for the purposes of business since no revenue was disclosed from such activities. He further states that the ITAT failed to consider that the CBUs are separate and distinct entities and therefore, the Assessee had failed to prove a direct nexus of the said interest expenses for its business purposes as stipulated under Sections 36 and 37 of the Income Tax Act, 1961 ('The Act')....

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....l the relevant material available on record. As regards to Ground No. 1, from the perusal of the records it can be seen that the loan procured was utilized by the assessee wholly and exclusively for its business as per clause 14 of the arrangement between third party contract bottling units (CBUs). The working capital is advanced to these CBUs so as to enable them to procure material, undertake manufacturing and maintain stocks and debtors for the assessee. The assessee's profit earning source is the arrangement with the CBUs wherein the assessee provides working capital to these CBUs to enable them to procure materials and carry out large scale manufacturing of alcoholic beverages and deliver the same to the assessee's customers on....