TaxTMI 
TaxTMI 
2018 (4) TMI 702
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....9.12.2004. Shri J.P. Agarwal, who was a partner in the erstwhile firm became a major shareholder in the assessee company. Shri J.P. Agarwal had a current account in the erstwhile firm which continued in the assessee company books and admittedly he had overdrawn the amounts from the assessee company. No interest was disallowed in the hands of the assessee company till assessment year 2008-09 on the ground of excessive borrowings made by Shri J.P. Agarwal from the assessee company. The ld. AO observed that the assessee company had debited in its profit and loss account a sum of Rs. 2,58,01,703/- towards interest expenditure against the loan of Rs. 39.16 crores [both secured and unsecured loans]. The ld. AO observed that the assessee had earned interest income of Rs. 1.63 crores against the loans given in the sum of Rs. 14.98 crores. During the year under consideration, the assessee's main business was wholesale and retailer in essential commodities like edible oil, wheat, flour and sheers. The ld. AO observed that the assessee had advanced the following funds to its Director and to a concern in which such director is interested: The ld. AO observed that on one hand, the assessee h....
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....addition made in the hands of Shri J.P. Agarwal towards deemed dividend for excessive borrowings by him from the assessee company in the sum of Rs. 21,13,676/-, was deleted by the Tribunal by holding that funds were given to Shri J.P. Agarwal only to facilitate the company's business and thereby proving business exigency thereon. In that decision, it was held that Shri J.P.Agarwal had permitted his properties mortgaged to the bank for enabling the assessee company to take the benefit of loan and in spite of request of Shri J.P. Agarwal, the assessee company was unable to release the properties from the mortgage. In such a situation, for retaining the benefit of loan availed from the bank, if decision was taken to give advance to Shri J.P. Agarwal, such decision was not to give gratuitous advance to its share holder but to protect the business interest of the assessee company. Accordingly, we hold that the excess borrowings made by Shri J.P. Agarwal from the assessee company was in the normal course of business and to retain the facility of loan availed from the bank, which clearly demonstrates the business nexus of the advances made by the company to Shri J.P. Agarwal. Hence, it ca....
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....n confirming the disallowances of a sum of Rs. 32,717/- u/s 14A of the Income Tax Act, 1961. 7. We have heard the rival submissions. We find that the ld. AR pleaded before us that the assessee had paid interest to the SBI in the sum of Rs. 96,85,630/- which is included in the total interest payment of Rs. 2,58,01,703/-. He also stated that the assessee had also received interest income of Rs. 1,64,60,886/- which needs to be netted off with the interest paid. He further argued that the assessee has got own funds to make the investments and hence no disallowance under the second limb of Rule 8D(2) is warranted. We find that the assessee is having sufficient own funds and in any case we are inclined to agree with the argument of the ld. AR that the interest received by the assessee is to be netted off with interest paid and bank interest also deserves to be excluded for the purpose of computing disallowance under the second limb of Rule 8D(2). This is because of the fact that the interest paid to SBI for the loan borrowed has been used only for the purpose of business and the same has been allowed as deduction in the earlier grounds supra. Once the bank interest is reduced from the....
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....HUF Jainarayan & sons HUF K.Ghanshyam Das HUF K.Raj Kumar HUF Kailash Kumar Agarwal HUF Mridula Agarwal Prem lata Agarwal Raghubir Kumar Ashok Kumar HUF Raghubir Kumar jainarayan HUF Raj Kumar Ghanshyam Das HUF Raj Kumar Kshamiri lalHUF Ravindra Kumar Kailash Kumar HUF Interest Paid (Rs.) 1384931.00 74054.8.00 15350.00 11830.00 1194.00 3624.00 54095.00 69239.00 5359.00 9305.00 35838.00 92982.00 11643.00 3743.00 16002 1.00 2233.00 2592.00 30263.00 14878.00 78319.00 730.00 28876.00 84146.00 100932.00 90099.00 6008.00 60390.00 79522.00 89401.00 90330.00 5438.00 51144.00 7061.00 67895.00 80430.00 10353 1.00 93193.00 87571.00 Document 3 39 Ravindra Kumar Surendra Kumar HUF 87762.00 40 S.Ghanshyam Das HUF 41 Savitri Devi Agarwal 94422.00 68070.00 42 Sunita Agarwal 6855.00 43 Surendra Kumar Kailash Kumar HUF 91984.00 44 45 Surendra Kumar Ravindra Kumar HUF 89905.00 46 Vijay Kumar Ashok Kumar HUF Vijay Kumar Jainayan HUF 68922.00 69284.00 47 kalawati Devi Agarwal ....