2024 (3) TMI 539

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..... 251/Del/2019, following grounds have been raised by the assessee: "1. The ld. CIT(A) has ignored the nexus of all the specific transactions of borrowings shown to him and erred in allowing only partial of interest paid on borrowings for the business of the firm ignoring the direct nexus of borrowings therefore the any of disallowance may please be deleted. 2. The ld. CIT(A) is unlawful, unjust in allowing only partial interest on borrowed funds ignoring, (a) Yearlong accrual of incomes earned (b) Own tax paid incomes (c) The commercial expediency and other facts." 3. Common grounds raised by the assessees in ITA Nos. 725 & 726/Del/2020, the only difference in amount involved. In ITA No. 725/Del/2020, following grounds have been....

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....nterest paid on Unsecured Loans amounting to Rs. 92,83,796/- on the ground that - (a) genuineness of the interest paid by the Appellant Firm is not provided bona fide despite the fact that the confirmations were received in respect of interest paid to various parties and their ITRs were duly filed during the assessment proceedings and also placed before the Ld. CIT(A) during the first appellate proceedings: (b) Interest expenditure is not allowable against remuneration received from a Firm in which the Appellant is a Partner." 5. ITA No. 251/Del/2019 : Asstt. Year : 2014-15 in the case of Rajesh Gupta is a lead case. 6. During the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed interest e....

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....y without any interest and accordingly, the assessee should be allowed deduction of interest being paid on borrowed funds to that extent. If the assessee's funds are used to lend to subsidiary without any interest then the interest payable by assessee on its own fund cannot be allowed fully." 7. The ld. CIT(A) tailored the action of the Assessing Officer modifying the interest disallowance of Rs. 76.81 lacs to Rs. 17.05 lacs (22% of the interest paid) holding that the disallowance has to be worked out by taking the ratio of average interest bearing funds and the average total funds. 8. Before us, it was submitted by the ld. AR that the amounts received as loans have been invested in M/s B. K. Sales Corporation as capital in partnershi....