2014 (3) TMI 686

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....n the facts and in the circumstances of the case, the ld. CIT(A) has erred in allowing the relief of Rs.9,36,947/- in respect of disallowances made u/s 36(1)(iii) by not considering the fact given in the assessment order." 3. The sole ground raised by the revenue in appeal no. 2029/D/13 reads as under:- "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in allowing the relief of Rs.10,60,293/- in respect of disallowances made u/s 36(1)(iii) by not considering the fact given in the assessment order." 4. Briefly stated the facts giving rise to these appeals are that the Assessing Officer completed the assessment u/s 153C/143(3) of the Income Tax Act, 1961 by making certain additions including disallowance u/....

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....e interest free funds available with a company. Advances with interest charged amounted to Rs. 1.37 crores. It might be a fact that the persons who have received interest free advance may not have business transactions with the assessee in the sense that they might not be dealing with food grains. The assessee is in the food grain and commission business. It is a common practice to advance loans at lower rate to the customers to get future business. The assessee cannot be faulted for charging interest at lower rate if that is dictated by the business norm. Similarly if the funds raised for business purpose, though not required immediately, may not be kept idle. The assessee may lend it at whatever rate possible, to be re-deployed on a later....

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....nterest free advances, specially when the Assessing Officer had not been able to establish that the interest bearing funds raised by the company were used for making interest free advances. The Commissioner of Income Tax(A) rightly observed that because of the wide gap between the total unsecured loan and the interest free funds available with the company, it cannot be presumed that the interest bearing funds were used for making interest free advances to the group concern by the assessee. In this situation, the addition made in this regard by the Assessing Officer is not sustainable which was rightly deleted by the Commissioner of Income Tax(A). Therefore, we are unable to see any ambiguity, perversity or any valid reason to interfere with....