TaxTMI 
TaxTMI 
2023 (8) TMI 69
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....ss Appeal Centre (NFAC) [hereinafter referred to as "CIT (A)'] has erred both on facts and in law in holding that interest on borrowed funds were excessive to the extent of5.25/14.25 part of interest and further erred in holding that 9/14.25 part of the interest is to be capitalized to the cost of shares and not allowable as an expenditure against business income. 2.1 That the learned CIT(A) has grossly erred in not allowing interest expenditure incurred during the year of Rs 21,99,986/- against interest income of Rs 2,48,227/- earned during the year (Net Rs 19,51,759). 2.2 That the learned CIT(A) has erred in totally ignoring the fact that the assessee had Nil borrowing as at the opening of the year and its surplus funds were alr....
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.... was no proper opportunity allowed to the assessee. 6. That the appellant craves leave to add, amend or alter any grounds of appeal and that all grounds of appeal are without prejudice to each other." 2. None appeared on behalf of the assessee. 3. Brief facts of the case are that the assessee has filed its return of income for the A.Y. 2012-13 by showing loss of Rs. 23,67,676/-. The case of the assessee was selected for scrutiny through CASS. Notices were issued u/s 143(2) and 142(1) upon the assessee and in response to such notices, the ld. AR of the assessee appeared before the ld. AO from time to time to represent the case of the assessee. After considering the submissions of the assessee, the AO passed the assessment order u/s 143....
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.... the statement of facts, and the submissions furnished by the appellant have been considered. 5.4 In this case, the AO made disallowance of Rs. 19,51,759/- (Rs. 21,99,986/- interest paid Rs. 2,48,227/- interest earned) on the premise that borrowing was made from a group concern and also that funds borrowed were invested in group concern and that there is no business activity during the year. The AO also observed that funds were borrowed at interest rate of 14.25% from group concerns whereas interest was charged at the rate of 9% on money advanced. From the facts of the case, it is clear that the appellant has paid excessive interest. Therefore a portion of the interest paid which is in excess of interest received i.e. 5.25% on loan taken....