2014 (7) TMI 861

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s. 4,35,000/-. 2.1 Briefly stated, the AO made a notional disallowance of interest claim of Rs. 5,22,000/- mainly for the reason that the assessee company had given interest free loans and the advances to its sister concern M/s. Manohar Export Pvt. Ltd. of Rs. 40,00,000/- and two other parties namely Do-Well Industries of Rs. 2,00,000/- and Tran-media Software Ltd. of Rs. 1,50,000/- and the assessee has claimed the expenses on account of interest paid of Rs. 1,98,69,671/-. The AO was of the view that the assessee had burdened its business with interest and simultaneously advanced money at free of interest. Hence, the AO calculated the interest cost on these advances @ 12% and thereby quantified interest disallowance at Rs. 5,22,000/-. Th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....heet (both at the beginning and end of the relevant year/PB Pgs. 28-53), we are of the considered view that the assessee company has sufficient funds to make interest free advances and hence the disallowance made/confirmed by the AO/Ld.CIT(A) on the basis of notional interest is not justified. Resultantly, the disallowance/addition confirmed by the Ld.CIT(A) stands deleted. Ground No. 1 is allowed. 3. In Ground No. 2, the assessee has agitated the decision of the Ld.CIT(A) confirming the addition of the contractual receipt of Rs. 70,000/- based on AIR information from one Mr. Praveen Desai. 3.1 Briefly stated, on the basis of AIR information, the AO has come to the conclusion that the assessee has received payments of Rs. 28,000/- fro....