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10.
3. The Revenue has raised the following grounds: -
(1). ''Whether on the facts and m the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made u/s 24 towards interest of Rs,33,27,470/-

paid in respect of loan taken from M/s, India Bulls Financial Services Ltd.?"

11. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A} erred in holding that the loans received from M/s India Bulls Financial Services Ltd had been utilized for reimbursement of loans already taken for purchase of property at Pune on which the assessee had shown rental income) without appreciating that neither a fund flow statement nor any specific evidence was furnished by the assessee- company to substantiate direct utilization of loans taken from M/s India Bulls Financial Services Ltd towards repayment of earlier loans?"

ii. "Whether on the facts and in the circumstances of this case and in law, the Ld. CIT(A] erred in allowing interest u/s 24lb) of the IT Act paid on the loan taken from M/s. India Bulls Financial Services Ltd. without appreciating that the purpose of availing of these funds was not acquiring the property at Nucleus. Pune but was merely taken against the said property?"

III "Whether on the facts and in the circumstances of the case and in law. the Ld. CTT(A) erred in not appreciating that in the end-use undertaking furnished by the assesses to M/s. India Bulls Financial Services Ltd at the time of sanction of the loan, it was ITA. No.6153 & 35/M/14, 7125/M/2013 CO. No. 141M/2016 A.Y. 2009-10 &2010-11 clearly stated that the ban was for business expansion / working capital and that the purpose of use of funds under loan ''shall11 not be changed in any manner during the tenure of the loan or that such change in purpose "shall'1 take place only with the prior written permission of M.s, India Bulls Financial Services Ltd.?, iv. "Whether on the facts and in The circumstances of the case and in law* the Ld. ClT(A) erred in not appreciating that in the details furnished by the assesses itself during proceedings for AY 2008-09 in the form of a statement explaining the loans raised and utilization of such loans for acquisition of assets, it was clearly stated that the loan from M/s. India Bulls had been utilized for purchase of shares in two private limited companies which fact was mentioned in the assessment order?'1 v. ''Whether on the facts and in the circumstances of the case and in law, the Ld. ClT(A) erred in not appreciating that in the instant case, in the absence of specific evidence to substantiate direct utilization of loans taken from M/s. India Bulls Financial Services Ltd as having been utilized lot repayment of earlier loans which were obtained for purchase of the property, the claim of deduction u/s 24(b) made by the assessee in respect of interest on bank loan paid to the tune of Rs.31,84,764/- is not maintainable?"

11. The brief facts of the case are that the assessee filed its return of income on 27.09.2010 declaring total income to the tune of Rs.17,56,841/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny and accordingly notice u/s 143(2) of the Act dated 23.09.2011 and notice u/s 142(1) of the Act dated 20.07.2012 were ITA. No.6153 & 35/M/14, 7125/M/2013 CO. No. 141M/2016 A.Y. 2009-10 &2010-11 issued and served upon the assessee. During the period, the assessee has shown the rental income. In the year under consideration, the assessee has debited the interest expenses to the tune of Rs.1,12,62,914/- to the profit & loss account. The interest of Rs.31,84,764/- claimed as deduction u/s 24 of the Act against the house property Office No. 701 & 702 at Nucleus, Pune which was paid to M/s. India Bulls Financial Services Ltd. The said property was purchased by assessee in the year 2005 and the loan from India Bulls Financial Service Ltd was taken in the year 2008. Therefore, notice was given and after reply to the notice the interest was added to the income of the assessee. The claim of the assessee u/s 14A of the Act was also assessed and Assessing Officer disallowed the expenditure to incur the exempt income to the tune of Rs.65,67,232/-. The total income of the assessee was assessed to the tune of Rs.1,15,26,671/-. Thereafter, the assessee has filed an appeal before the CIT(A) and the CIT(A) allowed the claim of the interest u/s 24B of the Act to the tune of Rs.31,84,764/- and also allowed the partly claim u/s 14A of the Act and assessed the expenditure to earn the exempt income to the tune of Rs.3,28,374/-, therefore, the revenue has filed the appeal in ITA. No.7125/M/2013 before us.

"1.3 From the perusal of the facts of the case, it is an undisputed fact that the assesses has purchased properly at Pune for a consideration of Rs,2,20,33,500/- in 2005. Secondly, A is also undisputed that as per balance-sheet of AV. 2006-07, the assessee was having only Rs.29,94, 199/-. share capital, reserves & surplus. Thus, the assessee has taken unsecured loans amounting to Rs.2,62,29,088/- which was utilizer for purchase of properly at pune it is also an undisputed issue that the assessee has received loan from M/'s. Indias Bulls Financial Services Pvt. Ltd. in the year 2008 amounting to Rs.2,04,91,51/-. The assessee has claimed that this loan received from M/s. India's Bulls Financial Ltd. was utilized for reimbursement of unsecured loans taken for of Pune property The appellant has copies of balance-sheet for A Y. 2006- 07, source of funds for AY 2005-07 find balance sheet Tor A.Y 2010-11 and the utilization of funds for A.Y 2010-11. The appellant has also filed the credited of interest paid of Rs.1,12,62,913/- out of which Rs.60,445,288/- was suo-motu disallowed and added back to the taxable income. The amount of Rs.20,32.86 W- was claimed u/s 24 paid to M/s Citi Bank Ltd. which was allowed by the A.O. and Rs,31 ,54,7647- claimed u/s 24 paid to M/s. Financial Services ltd. which was disallowed by the A.O. 7ns A.O. has called for information vi/'s 133(6) from M/s. India Bulls Financial Service^^Ltd. in which it was confirmed that this loan was arranged by the appellant for the property Office at 701 & 702, 7th Floor, Nucleus; Pune, but in the loan application form column for 'purpose of loan1 was left blank. This was the reason that the A.O. has created a doubt that this loan was Tot utilized for purchase of Pune property But the A.O has ignored that as per the loan agreement, it is dearly mentioned that this loans has been taken for purchase of Pune property only. Secondly, the AO. has concluded 'hat no evidence was submitted for the utilization of loan taken from MVs. India Bulls Financial Services Ltd. To explain this issue, the AR of the appellant has submitted its reply and extract of balance sheet for A.Y. 2006- 07 which is reproduced by the A.O, in the assessment order itself at page 6 & 7 where li is clear that the assesses was having only funds of Rs. 29.94.199/- on account of shareholders under ITA. No.6153 & 35/M/14, 7125/M/2013 CO. No. 141M/2016 A.Y. 2009-10 &2010-11 surplus reserves. Written this property was purchased in the year 2005, the assessee has taken unsecured loans of Rs.2,62,29,088/- from the family, members and friends This information was submitted before the A.O and the balance sheet for A Y. 2010-11 and (he utilization of funds tor A.Y. 2010-11 is also filed before the A.O. The payment of interest and the bifurcation is also submitted before 'the A,O, therefore, the conclusion of the A.O. that no evidence was tiled is not justifiable. The loan agreement clearly proves that it was taken for purchase of Pune property The unsecured loans utilized for purchase of this property were paid up by this loan taken from M/s. India Bulls Financial Services Ltd. clearly proves that there is a direct nexus (hat this [can was utilized for purchase of this property. Once it is established that this loan was utilized or purchase of property, therefore, the deduction u/s 24 of the I.T. ACT is allowable to the assessee. In view of these Facts & circumstances, it is held that there is a direct nexus that the assessee has. received loan from M/s. India Burls Financial Services Ltd. which was utilized for reimbursement of unsecured loans for purchase of Rune property, therefore, the disallowance made by the A.O, is not sustainable, hence deleted Ground of appeal is allowed."