TaxTMI 
TaxTMI 
2016 (1) TMI 857
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....cumstances of the case and in law, the learned Commissioner (Appeals) erred in confirming disallowance of Rs. 38,31,920/- and Rs. 17,11,417 under section 36(1)(iii) of the Act without appreciating that the appellant was having sufficient interest free funds and, therefore, there was no interest incurred for the advances made to its sister concern. 2. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) failed to appreciate that the advances were given towards the purchase of hoods and therefore were business advances required by commercial expediency and therefore could not have been disallowed U/s.36(1)(iii) of the I.T. Act. 3. The Assessing Officer erred in disallowing Rs. 2,76,251....
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....and Hon'ble Bombay High Court in the case of Kantilal Chotalal." 4. In pursuance to the directions of the Tribunal, the Assessing Officer took up the proceedings again. As far as interest expenditure is concerned, the Assessing Officer noticed that the assessee has given interest free loan to its sister concern Paks Veterinary Drugs Co. Ltd. amounting to Rs. 8,16,41,865. He, therefore, called upon the assessee to prove its claim that such interest free loan was advanced out of surplus interest free funds. He also called upon the assessee to prove the commercial expediency for advancing such loan. As observed by the Assessing Officer, though, the assessee claimed that it had sufficient surplus funds amounting to Rs. 39, crore out of w....
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....ion of the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd., [2009] 313 ITR 340 (Bom.) and the decision of Hon'ble Delhi High Court in CIT v/s Bharti Tele Venture Ltd., [2013] 313 ITR 502 (Del.). The learned counsel referring to the audited Balance Sheet of the company, a copy of which is at Page-1 of the paper book submitted that assessee had surplus funds of Rs. 39 crores on account of capital and reserve and surplus. That besides, the assessee had available with him an amount of Rs. 867.98 lakh towards advance against orders and sundry loans of Rs. 364.63 lakh. Therefore, it has substantial interest free fund available to make the advance to sister concern. He submitted as far as loan obtained from b....
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....tal, reserve and surplus, advances received against orders, and sundry loans which is more than enough to take care of the interest free advances to the sister concern. Moreover, as held by the Hon'ble Jurisdictional High Court in Reliance Utilities and Power Ltd. (supra) and the Hon'ble Delhi High Court in Bharti Tele Venture Ltd., (supra) when mixed funds viz. both interest bearing and non-interest bearing are available with assessee, presumption would be interest free loan has been given out of non-interest bearing funds available with the assessee. Therefore, keeping in view the aforesaid principle laid down by the Courts, when the assessee had sufficient interest free funds available with it, the plea of the assessee that it ha....
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....sight, but, he nevertheless submitted that the issue emanates from the assessment order and the Tribunal is competent to entertain the ground raised by the assessee. For such proposition, he relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Pruthvi Brokers & Shareholders, [2012] 349 ITR 336 (Bom.). 13. We have considered the submissions of the parties and perused the material available on record. There is no doubt that assessee has not raised this issue before the first appellate authority. However, on examination of record, it is found that this issue was not only the subject matter of dispute in the earlier round of litigation but is also a subject matter of disallowance by the Assessing Officer in the se....