TaxTMI 
TaxTMI 
2018 (3) TMI 1092
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....he assessee in the present case is a company which is engaged in the business of trading of textile machines, scrap, iron & steel and yarn. The return of income for the year under consideration was filed by it on 04.10.2010 declaring a total income of Rs. 21,75,440/-. During the course of assessment proceedings, it was noticed by the A.O. that the assessee has advanced substantial amount free of interest to M/s. Phool Commercial Pvt. Ltd. Since the said amount was not advanced by the assessee company for the purpose of its business as found by the A.O., interest expenditure to the extent attributable to the amounts so advanced as worked out at Rs. 22,48,695/- was disallowed by the A.O. 3. The disallowance made by the A.O. inter alia on acc....
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.... @F 15% per annum is also to be disallowed on the reducing balance." The Ld. CIT(A) thus sustained partly the disallowance made by the A.O. on account of interest attributable to the interest free advance given to M/s. Phool Commercial Pvt. Ltd. and aggrieved by the same, the assessee has preferred this appeal before the Tribunal. 4. We have heard the arguments of both the sides and also perused the relevant material available on record. The first contention raised by the learned counsel for the assessee is that the Ld. CIT(A) has directed the A.O. to recompute the disallowance to be made on account of interest by applying rate of 15% per annum on the advances given by the assessee company to M/s. Phool Commercial Pvt. Ltd. from 16.11.20....
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....by the assessee to M/s. Phool Commercial Pvt. Ltd. in the immediately preceding year and while deciding the issue relating to the disallowance of interest attributable to the said amount in A.Y. 2009-10, it was found that the said amount to the extent of Rs. 2.2 crores was advanced by the assessee company out of its own funds in the form of reserves and equity capital. The disallowance made by the A.O. on account of interest accordingly was sustained in A.Y. 2009-10 to the extent it was attributable to the balance amount of Rs. 51,00,000/- advanced to M/s. Phool Commercial Pvt. Ltd. Since the said amount which remained outstanding in the immediately preceding year was paid by the assessee during the year under consideration before 14.10.200....