2016 (3) TMI 683

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....ed in the earlier assessment year would equally apply to the assessment year under consideration in spite of the fact of binding precedents cited before them on the non applicability of the said decision to the assessment year under consideration ? (ii) Whether the Tribunal i0s correct in concluding that the disallowance of interest on the average of opening and closing balances was correct in view of the diversion of interest bearing funds even though the opening balance should be taken into consideration for working out and making the disallowance of interest in view of the binding precedent cited, which decision was not cited/considered in the earlier order ? and (iii) Whether the Tribunal is correct in concluding that the funds bo....

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....ed under Sub-Section (2) of Section 143. The Assessing Officer found that the assessee had advanced a sum of Rs. 16,07,809/- to one of its sister concerns by name M/s.Kriscast. 4. Since the net credit balance in the partners' capital accounts and current accounts was only Rs. 2,95,644/-, the Assessing Officer treated the balance of Rs. 13,12,164/- as out of interest bearing loans. Consequently, the Assessing Officer disallowed interest on the said amount at 24% per annum.  5. On appeal by the assessee, the Commissioner of Income Tax (Appeals) found that what was lent during the relevant assessment year was only Rs. 2,89,610/- and that therefore, interest on the said amount could be disallowed. Therefore, the Commissioner of Inco....

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....st free advances were paid, is the sister concern of the appellant. It is also not in dispute that the amount of interest free loans advanced during the relevant assessment year was lesser than the total amount now sought to be taken into account by the Assessing Officer. 9. Keeping the above admitted facts in mind, if we have a look at the orders of the three Authorities, it could be found that the only reason as to why the Authorities disallowed interest on the loans advanced by the assessee to its sister concerns, is the fact that the lending was for non business purposes. 10. But, a look at the orders of the three Authorities would show that there was no basis for the Authorities to come to the conclusion that the amounts were len....