2002 (10) TMI 334

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....the interest-free advances by the assessee. 2.Learned CIT(A) has further erred in deleting the addition of Rs. 31,700 made on account of low household withdrawals. 2. In regard to first ground, Assessing Officer noted that the assessee deposited a sum of Rs. 6.60 lakhs with M/s. Geeta Treads Ltd. (for short GTL), without interest. Loan was taken in earlier year, on which the assessee was paying interest. Therefore, Assessing Officer disallowed interest to the extent of Rs. 46,408, observing that the money has not been used for business purposes. Learned CIT(A) accepted the contention that loan was not raised during the year under consideration and since no nexus between borrowing and lending was proved, Assessing Officer was not right....

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.... assessee has discharged his burden by submitting copy of account of the parties from whom funds are borrowed to prove that they all are old. Learned DR, in rejoinder, submitted that the decision in the case of H.R. Sugar Factory Pvt. Ltd. is subsequent to the decision of Ram Chand Hari Chand (supra). If there is some other decision of the High Court, which is subsequent to the Allahabad High Court decision, that decision should be followed. The assessee has also not proved that interest-free loans were diverted for advancing loan to GTL. 2.3 We have considered the rival submissions, perused the orders of tax authorities and gone through the material on record as well as the case law cited above. We find that the decision in the case of ....