2026 (8) TMI 1181

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.... of appeal raised by the assessee are as under: "1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the disallowance of interest u/s. 57(iii) of Rs. 1,90,09,960/-, on restricting the interest expense to the extent of interest income earned during the year, 2.0 The Ld. CIT(A), before making the disallowance of interest of Rs. 1,90,09,960/-, ought to have considered the understated vital facts, being, a) The interest had been paid for the purpose of making/earning the interest income; b) The mere non-realization of interest income from defaulted borrowers (lendee) would not disentitle the appellant to claim the interest expense; 3.0 Without prejudice to Ground No.....

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.... interest-free advances to group concerns at lower rates. Accordingly, the loss claimed u/s 57(iii) of the Act was disallowed. The AO further noted that interest expenditure of Rs. 49,58,605/- was claimed in respect of unsecured loans which had been treated as unexplained cash credits u/s 68 of the Act in A.Y. 2013-14. Since the said addition was under challenge in appeal, the AO disallowed the corresponding interest expenditure of Rs. 49,58,605/-. Consequently, the total income was assessed at Rs. 1,68,49,540/- u/s 143(3) of the Act. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) noted that the assessee had challenged the disallowance of Rs. 1,90,09,960/- u/s 57(iii) of the Act and the disallowa....

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....merely because the corresponding loans were treated as unexplained in A.Y. 2013-14, particularly when the assessee had challenged the said addition and furnished confirmations. It was further contended that the disallowance resulted in double disallowance. Accordingly, deletion of both disallowances was prayed for. 5.1 The Ld. AR also submitted that addition of interest paid on loans held as non-genuine in the preceding AY 2013-14 was subject matter of the appeal before the ITAT for AY 2013-14. The Tribunal, in its order in case of Rajesh Jugraj Madhani v. DCIT in ITA No. 314/Mum/2024, dated 21.06.2024, remanded the issue back to the CIT(A) on account of the appellant being unable to place submissions. Pursuant to the remand, the appella....

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.... We find that similar issue had come up for consideration in assessee's own case for the immediately preceding AY 2013-14 before the ITAT in ITA No.314/Mum/2014 dated 21.06.2024. In the said case, the CIT(A) had dismissed the appeal of the assessee. The Tribunal decided the matter by observing as under: "8. We have heard the rival contentions and perused the material on record. From the assessment order, we note that assessee had made his submissions on the explanations called for in respect of loan transactions undertaken by the assessee. We also take note of the fact that appellate proceedings were initiated after almost 4 years of the institution of appeal and thereafter much of the time had gone during the period of pandemic. ....