Interest on Loan cannot be disallowed on mere assumptions

Subhakaran Sampatlall (HUF) Vs ITO (ITAT Kolkata)

The issue under consideration is whether the AO is correct in disallowing the net interest as debited to Profit & Loss A/ c of the proprietary concern?

In the present case, it is noted that the assessee has received deposit from several persons (details set out by AO at page 2 & 3 of his order) and paid to them interest @ 12.2% and has lent/given loan @ 7.25% and 10%. The AO has made the disallowance of interest by

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