Prove that interest expenditure was attributable to business

I'm an individual that earns income from business and other sources (mutual funds, shares etc.)

I had a loan for a year for business purpose and I repaid it with interest. In the same year I also made investments in funds which yielded dividend/interest income which was exempt from tax.

Now tax man wants me to do one of the following:

• pay income tax on the interest I've paid towards the loan (but interest is normally tax exempted)
• OR pay income tax on the income I've earned from mutual funds investment (but the income is normally tax exempted)

Tax man says he's invoking section 14A of the Act to disallow expenditure incurred in relation to the income which was exempt from tax.

The tax man wants me to prove that the entire interest expenditure was attributable to business income. How can I prove just that?

Please help. It is getting more and more dificult to do business in India.