AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 523
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....llowed interest on incorrect facts that the unsecured loans existed in the balance sheet of the proprietorship concern of the appellant as on 31-03-2017 whereas there is no such loan existed in the balance sheet of the proprietorship concern as apparent from the Balance Sheet filed of proprietorship concern namely M/s Rajwadi Emporium Pvt. Ltd. 3. The learned CIT(A) has erred in law and in facts to held that it becomes only academic whether the unsecured loans were transferred from the books of the proprietorship concern to the proprietor viz... the appellant and failed to appreciate the business transferred was of proprietary concern and not of all assets and liabilities of proprietor. 4. The learned CIT(A) has erred in law and in facts and in circumstances of case to held wrongly that the appellant has also not furnished any details with regard to the TDS made on such interest payments in spite of the fact that all details against the documents submitted. 5. The learned CIT(A) has erred in law and in facts and in circumstances of case to held wrongly that the interest payments stated to be payable by the appellant to various parties are not actually been paid upto 31-03-....
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.... no finding that funds of interest paid has been used for other purposes. 13. The learned CIT(A)ought to have allowed the interest expenditure when nothing in the reply is found wrong and there is nothing to suggest that interest expenditure has not been spent for earning income from other source. 3. Briefly stated, facts of the case are that the assessee filed return of income on 31.08.2018 declaring gross income of Rs. 26,14,219/- and claimed further deduction amounting to Rs. 2,25,000/-. The return of income filed by the assessee was selected for 'limited scrutiny' for examining the deduction claimed by the assessee under the head 'income from other sources'. The statutory notices under the Income-tax, 1961 (in short 'the Act') were issued and complied with. The claim of interest expenses as deduction against interest income was disallowed by the Assessing Officer and addition of Rs. 1,30,73,008/- was made in the assessment order passed on 22.03.2021. 3. On further appeal, the Ld. CIT(A) upheld the disallowance. Aggrieved, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. 4. Before us, the Ld. counsel for the assessee filed a Pap....
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....ary concern M/s Rajwadi Emporium amounting to Rs. 8,48,94,091/- was transferred to capital account of the assessee in said proprietorship concern. It was explained that the interest expenditure claimed is the interest payment made on such loans taken by the assessee from his proprietary concern into his personal capital account before transfer of business to the private limited company. 6.2 The Assessing Officer rejected the contention of the assessee for the two reasons. Firstly, the interest expenditure claimed of Rs. 1,30,73,008/- was not for the purpose of earning the interest income and secondly, the assessee did not substantiate actual payment or credit by way of TDS details. On further appeal, the Ld. CIT(A) upheld the disallowance observing as under : "5.4 The above submissions of the appellant have been carefully considered. It is the contention of the appellant that the unsecured loans were transferred to the capital account of the appellant just before the transfer of business to the Private Limited Company. However, it is seen that the unsecured loans existed in the balance sheet of the proprietorship concern of the appellant as on 31-03-2017. The agreement of transf....
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....rn as liability were transferred to the capital account of the assessee in the books of said proprietorship concern. He further submitted that, the assessee received interest on the sale consideration of the proprietorship concern and which has been shown as income under the head 'income from other sources'. According to the Ld. counsel for the assessee, the interest payment incurred by the assessee in respect of loans was in respect of amount due from company and therefore, interest expenditure incurred was for the purpose of earning of the interest income and thus deduction is justified u/d 57 of the Act. 8. On the other hand, the Ld. Departmental Representative (DR) submitted that interest income has been earned in respect of late payment of sale consideration of the proprietary concern sold/transferred by the assessee, whereas the interest expenditure is in respect of loans taken earlier for the purposes of business of the proprietary concern but now stands transferred to the personal account of the assessee. The income from sale or transfer of the proprietary concern has not been shown under the head 'income from other sources'. Therefore, the loan taken for the purpose of pr....