The issue of revenue’s appeal is that the CIT(A) has wrongly deleted the dis allowance made by AO under Rule 8D(2)(ii) of the Rules at Rs. 55,47,700/-. Here the assessee before the lower authorities and even before us explained that out of the total interest payment of Rs.97,22,656/-, the interest aggregating to Rs. 92,69,529/- was paid to Brila Global Finance Co. Ltd., DSP Merill Lynch Capital Ltd. and J.M. Financial Products Pvt. Ltd. is relating to loans taken for IPOs shares, which were business transaction and taken in stocks. To prove this point the assessee explained that the shares which were allotted in these IPOs were sold during the year under appeal and profit arising out of the same at Rs.87,42,284/- was disclosed as business profit. The balance shares were carried forward to the Balance Sheet as stock-in-trade. We are in full agreement with the findings of CIT(A) that the payment of interest amounting to Rs.92,69,529/- has a direct nexus with business income and once this is the position, the CIT(A) has rightly deleted the addition.
The CIT(A) has also consulted assessment records and found that assessee has submitted a statement showing utilization of borrowed funds to substantiate his claim that funds were utilised for applying new shares in IPOs which were kept in trading portfolio and part of those were sold and earned profit, which was taxed at normal rates. Accordingly, we are of the view that the CIT(A) has rightly deleted the dis allowance and we confirm the same. This issue of revenue’s appeal is dismissed.