Case Law Details
Sumeru Enterprises Vs ITO (ITAT Jaipur)
The Ld. CIT(A) has ascertained the factual aspect that this is not a closure of business but temporary discontinuance of business. We further noted that in earlier years the interest expenditure claimed by assessee were allowed by the department itself. However, in the year under consideration the same was not allowed for the reason that during the year under consideration fresh loans have been taken by the assessee for repayment of old loans taken for the purpose of business. Fresh loans taken during the year under consideration for the purpose of repaying the loans taken in past for the purpose of business, in our considered view does not change the character of the loan taken during the year under consideration. The loan taken for the year under consideration has to be treated as taken for business purposes for the simple reason that this loan was substituted with the loans taken in past after repaying the old loans. There is a direct nexus between the fresh loans and old loans because the fresh loans have been utilized for the purpose of repaying the old loan. Now fresh loans partakes the character of loans taken for business purposes. Interest paid on old loans was held as allowable, therefore, interest paid on fresh loans has to be allowed as the character of loan remains the same but only change of the name of the person / institution from whom the fresh loans are taken. Therefore, the decision of Hon’ble Allahabad High Court considered by Ld. CIT(A) in case of Raj Kumar Singh & Co. (supra) is directly on the issue. Therefore, we see no reason to interfere with the finding of Ld. CIT(A). Accordingly, we confirm the findings of the Ld. CIT(A) in respect to both the disallowances deleted by him.
FULL TEXT OF THE ITAT JUDGEMENT
These are three appeals filed by the assessee against the orders of the ld. CIT(A), Ajmer dated 25.02.2019 for the assessment years 2012-13 to 2014-15 respectively. Since common issues are involved, all these appeals were heard together and disposed off by this consolidated order.
2. In ITA No. 886/JP/2019 for A.Y 2012-13, the assessee has taken the following grounds of appeal:-
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