2026 (6) TMI 918

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....nt Order, dated 21/12/2016, passed under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'], for the Assessment Year 2014-2015. 2. The Assessee has raised the following grounds of appeal: "Ground No. 1-Disallowance of interest expense 1. The Ld. CIT(A) has erred in upholding the proportionate disallowance of interest expenditure under section 57(iii) of the Act amounting to Rs. 7,00,172 on the alleged ground that the entire borrowed capital was not utilized for earning taxable interest income. 2. The Ld. CIT(A) failed to appreciate that the borrowed funds from IDBI Bank were wholly and exclusively utilized for the purpose of earning interest income, and the movement of Rs. 50,00,0....

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....e perused the material on record. 4. It emerges that assessment under Section 143(3) of the Act was framed on the Assessee for the Assessment Year 2014-2015 vide Assessment Order, dated 21/12/2016. The Assessing Officer, inter-alia made disallowance of INR.19,11,847/- under Section 57(iii) of the Act. 5. Being aggrieved, Assessee carried the issue before the Learned CIT(A) and filed additional evidence. It was contended on behalf of the Assessee that the Assessee had taken a loan of INR.16.50 Crores from IDBI Bank out of which INR.16.45 Crores were laid to M/s.Dhami Sampda Pvt. Ltd. (DSPL). The Assessing Officer had incorrectly recorded in the Assessment Order that the Assessee had taken a loan of INR.16.45 Crores from IDBI Bank and h....

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.... below had failed to appreciate that the entire amount of loan taken from IDBI Bank was given by the Assessee to DSPL. Out of the aforesaid amount INR.50,00,000/- was paid by the DSPL to the Assessee as arrears of salary and did not tantamount to repayment of loan. On perusal of material placed on record, we find that the aforesaid averment made by the Learned Authorized Representative for the Assessee to be factually correct. Perusal of Form 26AS and Form 16 pertaining to Assessment Year 2011-2012 issued by the DSPL to the Assessee along with ledger Account of the Assessee in the books of DSPL clearly showed that the amount of INR.50,00,000/- was received from DSPL as salary. The fact that INR.50,00,000/- was given by the Assessee to DSPL ....