TaxTMI 
TaxTMI 
2017 (10) TMI 479
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....ted to the disallowance of interest expenditure of Rs. 3,65,752/-. 3. The Revenue, on the other hand, in its appeal has assailed the order of the CIT(A) towards reversal of disallowance of Rs. 3,68,94,759/- made by the Assessing Officer (AO) under s.40(a)(ia) of the Act for non-deduction of tax at source under s.194H of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 4. As regards the assessee's appeal, the relevant facts in brief are that the assessee is a partnership-firm engaged in the business of sole distributor of Sheela Foam Pvt.Ltd. in the State of Gujarat for sale of its products in PUF foam-sheets, pillows, cushions, covered mattresses etc. The assessee filed return of income for AY 2011-12 declaring total incom....
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....th these parties to whom the interest-free advances are given are related to the partners of the assessee-firm. On further enquiry from the Bench, it was submitted by the Ld.AR of the assessee that interest is chargeable on the capital balances of the respective partners. The Ld.AR however, submitted that in view of the huge accrued profits available at the disposal of the assessee to enable it to make interest-free advances, the case of the assessee squarely covered by the decision of Hon'ble Calcutta High Court in the case of Woolcombers India Ltd. (134 ITR 219) [Cal.]. The Ld.AR submitted that the aforesaid decision of the Calcutta High Court has been approved by the Hon'ble Apex Court in the case of East India Pharmaceutical Works vs. C....
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....ilability of non-interest bearing funds at its disposal at the time of making advances. The Ld.DR next submitted that facts of each year varies and pleaded that in the absence of any positive material, there is no warrant to refer the matter back to the file of the CIT(A) in these circumstances. 8. We have carefully considered the rival submissions. The assessee in its appeal has agitated the disallowance of proportionate interest expenses on certain advances made two parties which are connected to the partners of the assessee-firm. It is noticed that the assessee has given advance to Smt.Kalpanaben Amin. The outstanding amount at the beginning of the year to her was Rs. 2,32,064/- which welled to Rs. 8,17,025/- at the end of the year. Sim....
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....onate disallowance of interest to the extent of interest-free advances. The Revenue Authorities have rejected various contentions of the assessee on the ground that no fund flow statement has been furnished before them to appreciate assessee's perspective. We do not see any such statement or other evidences before us either, which could establish usage of non-interest bearing funds. Needless to say, onus lies on assessee to establish that expenditure has been incurred for business purposes to enable it to claim deduction under s.36(1)(iii) of the Act. Therefore, on facts, we do not see any reason to grant second opportunity to the assessee in this regard and increase multiplicity of proceedings. We shall now turn to the decision of the Hon'....
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....s payable by the firm. On these facts, we do not see any purpose of sending the issue back to the file of CIT(A). The assessee has not been able to justify before us as to what facts required to be re-examined by the Revenue. It is the assessee which has failed to discharge the onus in spite of specific opportunities in this regard. We are of the view that assessee has not been able to make out any demonstrable case to show the availability of interest-free funds at its disposal to support its claim for remitting the matter back to the file of the CIT(A). 9. In the result, appeal of the assessee in ITA No.2748/Ahd/2014 for AY 2011-12 is dismissed. 10. Now we shall turn to Revenue's appeal in ITA No.3224/Ahd/2014 against the order of the C....
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.....O. rejected the said explanation mainly on the grounds as stated in para-8 of the assessment order by relying upon the order for AY 2010-11." 4.2. Identical issue came up for consideration in the preceding A.Y. 2010-11. CIT(A) allowed this ground of appeal vide the order dtd. 26/08/2013. On appeal by the Revenue, the ITAT, Ahmedabad vide the order dtd. 13.06.2014 in ITA No.2433/Ahd/2013 [By Assessee] & No.2553/Ahd/2013[By Revenue] dismissed the appeal of the revenue by holding as under :- "5.1. We find that the Id. CIT(A) has followed the decision of Hon'ble Coordinate Bench of the Tribunal rendered in assessee's own case in ITA No.l835/Ahd/2011 forA.Y.2008-09 dtd. 02-08-2013. The contention of the Id. Counsel for the assesse....