TaxTMI 
TaxTMI 
2018 (4) TMI 451
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....s to the balance sheet for the year under consideration, it was seen that assessee-firm has advanced a sum of Rs. 37,16,048/- to Ms. Monisha Mittal as interest free loan. The assessee was given show cause notice as to why proportionate interest shall not be disallowed as the assessee has paid interest of Rs. 24,78,703/- to Punjab National Bank and Rs. 8,86,523/- as interest on buyers credit. The assessee submitted before A.O. that an amount of Rs. 30 lakhs was paid to Ms. Monisha Mittal in May, 2009 for a agreed period of 02 years for which interest has been charged. However, she defaulted payment and with much of hardship amount returned back to the assessee in January, 2014. Hence, in order to resolve the issue, it was mutually agreed tha....
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....3.2013) and Rs. 80 lakhs was outstanding as on 31.03.2012. The A.O. has not pointed-out as to how the interest bearing funds have been utilised for giving such loan to Ms. Monisha Mittal. Since assessee was having sufficient funds to give loan to Ms. Monisha Mittal, therefore, the addition is wholly unjustified. The Ld. CIT(A), however, confirmed the addition and dismissed this ground of appeal of the assessee-firm. The Ld. CIT(A) as regards disallowance of the expenditure, restricted the addition to Rs. 30,000/- because the addition was made only on estimate basis. 5. The assessee challenged the additions of Rs. 4,99,437/- and Rs. 30,000/- as above in the present appeal. 6. I have considered the rival submissions and perused the mate....
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....Tribunal that interest free advances were made by assessee to sister concern for its business purposes. It was also noticed that advances were extended out of borrowed funds and not out of any credit balance available with assessee-firm. It was held that impugned order passed by the authorities below was to be upheld." 7.2. The Hon'ble Punjab and Haryana High Court in the case of Thukral Regal Shoes vs. CIT (2016) 72 taxmann.com 192 (P & H) / (2016) 241 Taxman 361 (P & H) has held that "where the assessee-firm failed to establish that properties purchased by its partners were put to use by the firm, deduction on interest expenditure on borrowed fund could not be allowed in view of proviso to Section 36(1)(iii) of the I.T. Act." 7.3. T....
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....nk loans have been taken for specific purpose for which limit have been granted to the assessee-firm. According to the Learned Counsel for the Assessee, these limits were provided in assessment year under appeal. Therefore, assessee-firm rightly contended that these limits have been availed for specific business purposes. The authorities below have failed to point-out that if any borrowed funds were diverted for non-business purposes or giving above loan. The authorities below failed to prove any nexus between the borrowed funds and the funds advanced to Ms. Monisha Mittal. The assessee-firm also pleaded that it was having capital of Rs. 1.06 crores in partner's capital which is sufficient to advance loans to Ms. Monisha Mittal. This submis....