TaxTMI 
TaxTMI 
2016 (1) TMI 854
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....th the financial institutions ? 2. Whether the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the disallowance of interest expenses amounting to Rs. 24,05,333/- by relying upon the judgment of Hon'ble Delhi High Court in Bharti Televentures 331 ITR 502 even the assessee failed to prove its commercial expendiency and CIT (A) also held that there was no commercial expediency ? 3. Whether the facts and circumstances of the case and in law, the learned CIT (A) erred in not considering the decision in the case of CIT vs. Abhishek Industries Ltd. 286 ITR 1 in which the Hon'ble Punjab and Haryana High Court has held that the onus of establishing the nexus between the interest free funds and advances is on the assessee and receipts from all sources go in common kitty ?" 03. All the three grounds of appeal are against the deletion of interest disallowance amounting to Rs. 24,05,333/- by CIT (A) holding that assessee was having adequate interest free funds at its disposal without considering the fact that the interest free funds would be available with the assessee then assessee would not have applied for debt restructuring with the....
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....er before the CIT(A) who in turn restricted the disallowance to Rs. 5,20,783/- and deleted disallowance of Rs. 24,05,333/-. Therefore revenue is before us in this appeal. The Assessee is having a share capital of Rs. 35 crores as its own fund as at 31.03.2008. Against which the advances given to this two parties are of Rs. 2,08,28,625/-. Therefore it's apparent that assessee has more interest free funds available with it then amount given to these parties free of interest. On reading of the assessment order it is established that AO has not found any nexus of the interest bearing funds diverted to non-interest bearing advances. When the matter was before CIT(A), CIT(A) has examined the issue on each transaction wise and found that amount of interest of Rs. 5,20,783/- out of total interest expenditure of Rs. 2,92,611 is not for the purpose of the business. This disallowance confirmed by the CIT is based on assessee conceding that amount of loan of Rs. 10 lakhs on 07.03.2008 and Rs. 6 lakhs on 31.03.2008 given to M/s Netcradel India Pvt. Ltd. is out of borrowed funds taken from HSBC and IDBI. Similarly an interest amount of Rs. 1,56,916 pertaining to saffron IT Solutions Private Limi....
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....93 the appellant had received back from the sister concern more than Rs. 10 lakhs. The capital of the firm and interest-free unsecured loans with the appellant for exceed the amounts advanced to the sister concern in all the years under appeal a fact neither controverted nor disproved by the learned Departmental Representative also." [Emphasis supplied] 10. Additionally, the Tribunal has also noted that the Departmental Representative could not point out any specific interest bearing borrowed funds, which had been diverted by the assessee to its sister concern. 11. The aforenoted findings of the Tribunal being based on the relevant evidence on record, no question of law, much less a substantial question of law, arises from the orders of the Tribunal. It is not shown to us as to which findings of the Tribunal is either without any evidence or material or it is contrary to the evidence, to term it as perverse. Thus, there is no scope for interference by this Court on the aforenoted findings of fact recorded by the Tribunal." Further Honourable Mumbai high court in CIT V Reliance Utilities limited 313 ITR 340 has held that 10. If there be interest-f....
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.... Total 36,39,51,960/- Less :- 3 account Debit balance 22,89,78,092/- 4 Non-interest Bearing funds available with the assessee as at 31.3.2008 13,49,73,868/- From above analysis it is apparent that assessee has huge interest free fund available with it and therefore the disallowance u/s 36(1) (iii) on account of advances given to other parties from of interest cannot be disallowed. Therefore we confirm the order of CIT (A) in deleting the disallowance of Rs. 24, 05,333/- on account of amounts advanced to sister concerns without charging interest. Hence appeal of the revenue is dismissed. 07. In the result appeal of the revenue is dismissed. ITA NO 6260/Del/2013 A Y 2010-11 (Assessee's Appeal) 08. This appeal is preferred by assessee against the disallowance of club membership fees of Rs. 1,32,092/- holding that these are of personal nature and against the disallowance of Interest of Rs. 36,93,872/-. 09. The Brief facts of disallowance on account of club membership is that assessee has obtained corporate membership fees of the club and paid Rs. 1,00,000/- as corporate membership fees and Rs. 32,092....