Deduction of Interest paid on borrowed capital

Assesseee is promoter and developers.  Has taken the loan from Bank. Bank has stiputed condition that amount will be used for the project only. However,  considering the status of the project, assessee has advanced the loan to its associate firm and earn the interest. Assessee has claimed the interest as part of cost of construction after reducing the interest received from associate concern. AO has not appreciated the concept Netting of Interest and made the addition on the decision of Tuticorin Alkali 227 ITR 172.  Whether assessee can take a stand in appellate proceedings that since there is direct nexus…

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