2017 (4) TMI 1330

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.... short, "the Tribunal") in ITA No. 194(Asr)/2015, for the assessment year 2010-11, claiming following substantial questions of law:- "(i) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting the addition of Rs. 2,39,01,531/- on account of disallowance of interest expenditure, ignoring the specific finding of the CIT(A) that the assessee had not even attempted to show that the investments in sister concerns served any business purpose? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting the addition of Rs. 2,39,01,531/- on accoun....

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.... of his proprietorship business concerns. The Assessing Officer observed that if the assessee had excess surplus funds, what was the need to take interest bearing loans. Therefore, the interest paid to the Bank was not for any funds required for the assessee's own business but for making interest free advances to related parties. With these observations, the interest expenditure of Rs. 2,39,01,531/- claimed by the assessee was disallowed by the Assessing Officer in view of Section 40A(2)(a) and Section 36(1)(iii) of the Act. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 27.02.2015, Annexure A.II, the CIT(A) confirmed the disallowance of interest expenditure ma....

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....non interest bearing investments. The relevant findings recorded by the Tribunal read thus:- "12. In the present case, we find that no interest bearing funds in the form of Proprietor's Capital Account and sundry creditor as apparent from (PB page 2) and (PB page 6) are much more than the amount invested in the group companies without charging of interest. The proprietor's capital as appearing in PB page 2 is Rs. 1,54,45,382/- whereas the sundries which are also non interest bearing funds appearing as in PB page 6 are to the tune of Rs. 83,27,79,7908/-. Therefore, the total of non interest bearing funds as available with the assessee are to the tune of Rs. 84,82,25,180/- against which the assessee had invested as non interest beari....