TaxTMI 
TaxTMI 
TaxTMI 
2012 (1) TMI 237
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....,657/- made by the A.O. out of the claim of interest. 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) ought to have deleted the said disallowance. 3) It is therefore, prayed that the disallowance of Rs. 2,81,657/- may be deleted." 3. Now, we reproduce grounds raised by the assessee in I.T.A.No. 3512/Ahd.2010 which are as under: "1. The learned CIT(A) has erred in law and on facts in confirming the disallowance of Rs. 2,63,912/-Assessing Officer out of claim of interest. 2. On the facts and in the circumstances of the arid In Taw the learned C.I.T. (A) ought to have deleted the disallowance it is therefore prayed that the disallowance of Rs. 2,63,912 may be deleted. 3. Your appellant craves leave to add, alter or amend any ground of appeal at the time of hearing. 4. This appeal is filed late by three days. The small delay in filing the appeal was due -to circumstances beyond the control of the appellant and for no fault on his part. In the circumstances the small delay in filing this appeal may kindly be condoned keeping in view the Hon'ble "Supreme Court judgement reported in 167 I.T.R 471." 4. We find that the only issue involved in....
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....ore asked the assessee to explain why on proportionate bases the Interest be not disallowed at the loans taken on interest to the extent of loans given without charging interest is not for the purpose of business. The assessee stated that the loans and advances were given for the purpose of business. The AO stated that he is examined the copy of account of this party, and there isno business transaction entered in the account of this party and hence there is no business connection "or commercial connection. All the transactions are of financial nature. The A.O. therefore, disallowed the interest of Rs. 263912/- out o the interest claim." 7. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but without success and now, the assessee is in further appeal before us. 8. Ld. A.R. placed reliance on the following judicial pronouncements: (a) 285 ITR 554 CIT Vs Prem Heavy Engineering Works P. Ltd. (b) 260 ITR 363 CIT Vs Tin Box Co. (Del.) (c) 304 ITR 123 CIT Vs Motor Sales Ltd (Alld.) (d) 132 TTJ 233, Madhu Industries Vs ITO (e) 313 ITR 340 CIT Vs Reliance Utilities & Power Ltd (Bom.) 9. As against this, Ld. D.R. supported the orders of authorities below.....
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....The balance sheet of the assessee as on 31.03.2007, is available on page 8 of the paper book, as per which proprietor's capital was Rs. 64.30 lacs whereas the amount utilized for fixed assets and investments was at Rs. 106.27 lacs. Hence, we find that no interest free funds were available with the assessee for giving interest free advances. The balance sheet of the assessee as on 31.03.2006 is also available on page 16 of the paper book, as per which proprietor's capital account has balance of Rs. 51.15 lacs and funds utilized for fixed assets and investments was Rs. 101.67 lacs and hence, it is seen that in this year also, no interest free funds wee available with the assessee for giving interest free advances. Regarding business expediency, no evidence has been brought on record before the authorities below or before us that the impugned advances were given for business expediency. Regarding the judgment of Hon'ble Bombay High Court rendered in the case of Reliance Utilities & Power Ltd. (supra), we find that this judgment is not applicable in the present case because the facts are different. In that case, the facts are that investments were mainly made during January 2000 to Mar....
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....i High Court in the case of Tin Box (supra). In that case, interest was paid by the assessee on overdraft from State Bank of India against hypothecation of goods etc and pledge of land and building, plant & machinery etc. A clear finding is given in that case that the assessee has not paid any interest to another party either in the past or during the relevant year. In the present case, there is no borrowing from bank and borrowings are unsecured loan of Rs. 126.72 lacs and, therefore, the purpose of these unsecured loans and use thereof is not static whereas the purpose of bank loan was for business purpose alone and therefore, the facts are different in the present case and hence, this judgment of Hon'ble Delhi High Court is also not applicable in the present case. - Now, we consider the applicability of Tribunal decision cited by the Ld. A.R. rendered in the case of Madhu Industries (supra). This is not applicable as facts are different. In that case, interest free advances were given to suppliers and hence, were business advances but in the present case, the facts are not so. - Now, we consider the applicability of the judgement of Hon'ble Delhi High Court rendered in the c....