TaxTMI 
TaxTMI 
2015 (8) TMI 1290
X X X X Extracts X X X X
X X X X Extracts X X X X
....,368/- made on account of interest free advance given to sister concern by the assessee, thereby ignoring the judgment of Hon'ble Punjab & Haryana High Court in the case of M/s Abhishek Industries Ltd., 286 ITR 1. 3. The only issue involved in this case relates to the allowance of interest on account of interest free advance given to sister concern. 4. The brief facts of the case are that the assessee is engaged in the business of manufacturing cycle parts. For the impugned assessment year, return declaring NIL income was filed by the assessee on 3.10.2008. During assessment proceedings it was found that the assessee had given interest free advances of Rs. 1,51,86,399/- to M/s Omax Enterprises Pvt. Ltd. a sister concern. Further it was f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... relatives are almost double the amount remaining as interest free advance to sister concern. He, therefore, held that the action of the Assessing Officer in making disallowance on the entire amount advanced free of interest is at variance with the action taken in assessment year 2006-07, which was on logical footing. According to the learned CIT (Appeals), the disallowance made during the year under consideration was not called for in view of the above logic highlighted by the Assessing Officer in assessment year 2006-07 with which, the learned CIT (Appeals) agreed. Consequently, he deleted the disallowance of Rs. 18,22,368/-. 6. Aggrieved by the order of the learned CIT (Appeals) the Revenue has filed the present appeal before the Tribun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rns amounted to Rs. 1,51,86,399/-.In the assessment framed for at 2006-07, the Assessing Officer held the interest free advances to have been made out of interest free funds available and disallowed interest under section 36(1)(iii) of the Act only on the excess amount of Rs. 38,61,399/-. 9. From the above set of facts it is evident that in assessment year 2006-07, the issue of disallowance of interest u/s 36(i)(iii) of the Act, on interest free advances made to sister concerns was examined by the Assessing Officer and it was held by the Assessing Officer that the interest free advances were made out of interest free funds to the extent available. It was only the excess advances, which were held to be made out of interest bearing funds and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the very basis of the deductions permitted during the past years, whether a specific finding was recorded or not. A departure from that finding in respect of the said amounts advanced during the previous year would result in a contradictory finding; it will not be equitable to permit the Revenue to take a different stand now in respect of the amounts which were the subject-matter of previous years' assessments; consistency and definiteness of approach by the Revenue is necessary in the matter of recognizing the nature of an account maintained by the assessee so that the basis of a concluded assessment would not be ignored without actually reopening the assessment. The principle is similar to the cases where it has been held that a debt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... free funds were sufficient to meet the investment. 12. The assesses case is also squarely covered by the decision of the Punjab and Haryana High Court in the case of CIT-I, Ludhiana Vs. Rakesh Gupta in ITA No.37 of 2014 dated 2.7.2015, wherein one of the substantial questions was as under : "(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in upholding the order of the Id. CIT(A) wherein disallowance made under Section 36 (1) (iii) was deleted ignoring the judgement of Hon'ble Punjab & Haryana High Court in the case of CIT Vs Abhishek Industries Ltd. reported 286 ITR 1, relied upon by the Assessing Officer? While deciding the above question, the Hon'ble Jurisdictional High Court h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee to advance the interest free loan to his son. It is not possible to hold that the appreciation of these facts was perverse or absurd. No question of law, therefore, arises in this regard either." 13. In the above case,, the substantial question of law raised by the Revenue was that the Tribunal has passed the order ignoring the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. M/s Abhishek Industries Ltd., 286 ITR 1. It appears that while deciding the substantial question of law, the Hon'ble High Court has considered the decision rendered in the case of M/s Abhishek Industries Ltd. (supra). In the instant case also, the Revenue has challenged the order of the learned CIT (Appeals) on the ground that wh....