2014 (9) TMI 1088

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....i N.A. Joshi- D.R. O R D E R PER HARI OM MARATHA, J.M. : This is appeal of the department filed, for A.Y. 2009-10, against the order of ld. CIT(A) dated 17.01.2014. 2. The sole issue involved in this appeal is whether the ld. CIT(A) has correctly deleted the addition of Rs. 82,15,611/- made after disallowance of interest because to the extent the assessee has given interest free advanc....

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....rest free to close relatives. Therefore, he proceeded to disallow proportionate interest and after considering assessee's reply disallowed a sum of Rs. 82,15,611/- out of interest expenses claimed @ 11% interest as detailed at page 3 of the assessment order. 2.1 Aggrieved, the assessee filed appeal and ld. CIT(A) has deleted the above addition of Rs. 82,15,611/- while deciding issue regarding d....

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....e assessee has charge interest on such interest-free advances. He, further, stated that the judgement of Hon'ble Apex Court in the case of S.A. Builders vs CIT 288 ITR 1 S.C. on whose ratio decidendi ld. CIT(A) has relied, is not applicable to the facts of this case. 2.3 On the other hand ld. A.R. has stated that there is no diversion of the borrowed funds and the case of the assessee is covere....

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....harging interest. In A.Yrs. 2006-07, 2007-08, and 2008-09 when CIT(A) deleted similar disallowances, did not file appeal, hence, to maintain consistency, this disallowance is not justified. The A.O. has not invoked the provisions of Section 36(i)(iii) of the Act. Notional interest cannot be charged as has been done in this case. There is no allegation of diversion of funds. It is also noticed that....