TaxTMI 
TaxTMI 
2016 (4) TMI 1234
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....he case in sustaining disallowance of Rs. 1010167/- u/s 36(1)(iii) out of interest paid and the disallowance is in any case too excessive. 3. Briefly stated the facts of the case are that the Assessing officer noted that during the year under consideration the assessee had given loans and advances to various persons. The details of loans and advances are as under:- 1) Disk India Pvt Ltd. Rs. 5,00,000/- 2) Sonal Fabricators Pvt Ltd Rs. 11,20,000/- During the course of assessment proceedings, the Assessing officer required the assessee to furnish details of above debit balances and to explain as to why proportionate interest thereon should not be disallowed u/s 36(1)(iii) of the Income-tax Act, 1961 (in short 'the ....
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....t. Ltd on behalf of the Sonal Fabrication Pvt Ltd for the fabrication of LPG in financial year 2005-06, It is evident from the records that the amounts in question were paid to the above concerns in the financial year 2005-06 relating to assessment year 2006-07. Thus, these advances are old advances and no fresh payments have been made to these concerns in the financial year 2006-07. The tankers were got fabricated from the above concerns in the financial years 2004-05 and 2005 06. The vehicle numbers and tank numbers fitted are as under;- Vehicle No. Tank No. PB 10 BM 8757 SFL/LPG/050 PB 10 BM 8760 SFL/LPG/051 PB 10 BL 4495 SFL/LPG/028 PB 10 BL 4496 SFL/LPG/029 It is a matter of record that the tank bodies ....
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....akhs 28.1.2006 101701(against DD) 1.5 lakhs Total 11,50,000/- 5. There is no material on record to controvert the documentary evidence furnished on behalf of the assessee. Considering the entire facts and circumstances of the present case, it is clear that the disputed amounts had been given as trade advance to the above concerns therefore, no question of charging of interest arises, and at the same time no disallowance of interest u/s 36(1)(iii) of the Act is required to be made. Accordingly, we allow this ground of appeal raised by the assessee and delete the disallowance of interest on these two amounts i.e. Rs. 5 lakhs and Rs. 11,20,000/- advanced to M/s Disk India Pvt Ltd and M/s Sonal Fabrications Pvt. Ltd.....
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....rrent year under consideration are held to be for non-business purposes on which proportionate disallowance out of interest is upheld. The disallowance of interest should be worked out for the period such amount has been outstanding. Similarly, as regards the debt balance in the accounts of Vicky Carriers (Rs. 68,33,492/-) and Rajiv Kapoor Transport (Rs.11,35,051/-) are concerned, I do not find any force in the arguments of the Ld. counsel that these were for business purposes and the submission that there are two different accounts relating to the same persons and both the accounts should be seen together to work out the debit / credit balance is also devoid of any merit. Considering the facts, I am of the opinion that the Assessing office....
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....djusted from time to time. Shri Gagandeep Singh, Ld. Counsel for the assessee submitted that amount due was on account of trade dealings, the disallowance of interest is uncalled for. Shri Gagandeep Singh, Ld. Counsel for the assessee also submitted that outstanding amount in the name of M/s Rajiv Kapoor Transport was on account of outstanding balance of plying of trucks under sub contractorship of M/s Hindustan Petroleum Pvt Limited, a Government of India undertaking. Shri Gagandeep Singh, Ld. Counsel for the assessee submitted that copies of accounts were filed before the Assessing officer. In our opinion, the lower authorities have not properly considered the reply of the assessee and also the documentary evidence submitted by the assess....