2025 (7) TMI 1677

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....l. CIT) - Ld. Sr. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2012-13 arises out of an order passed by learned Commissioner of Income Tax (Appeals)-3, Ludhiana [CIT(A)] on 28-07-2016 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 31-03-2015. The sole grievance of the revenue is part deletion of interest disa....

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.... of funds. The funds were used for income generating activities as well as to carry out non-productive activities. The provisions of Sec. 57(iii) allow expenditure laid out or expended wholly and exclusively for the purpose of making or earning of such income. In the absence of any direct nexus shown by the assessee between interest bearing funds and interest yielding funds, the whole interest exp....

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....omputed interest disallowance of Rs. 43.45 Lacs. Out of this, the assessee had already disallowed expenditure of Rs. 27.36 Lacs. 4. The findings of Ld. CIT(A) are contained in para 3.2 to 3.4 of the impugned order. The Ld. CIT(A) concurred with the submissions of the assessee and referred to assessment framed by Ld. AO u/s 143(3) in AY 2011-12 wherein Ld. AO partially disallowed interest expendit....

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....herefore, confirmed against which the revenue is in further appeal before us. 5. It could clearly be seen that rule of consistency favors the case of the assessee. The working made by the assessee is in line with the view taken by the assessing authority in past three years. In AY 2011- 12, the Ld. AO had verified the nexus of borrowed funds and made partial disallowance only whereas in this year....