TaxTMI 
TaxTMI 
2014 (7) TMI 1282
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.... in the case of CIT V. Jugal Kishore, 265 CTR (Raj) 215, where on similar facts as that of our case, the addition u/s. 36(1)(iii) was deleted. 3. That the Ld. CIT(A) erred in not considering the Hon'ble Supreme Court ruling in the case of S.A. Builders Ltd. V. CIT, 288 ITR 1 (S.C.). 4. That the Ld. CIT(A) has compared the facts in our case with that of Hon'ble High Court of Punjab & Haryana in case of Abhishek Industries which has got no similarity with the present case. 5. That the appellant craves to add other grounds as may be urged at the time of hearing and it is prayed that addition made of Rs. 349760/- is arbitrary and is against natural justice which needs to be deleted. 3. After hearing both the parties we find ....
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....t of its own funds for business purposes and that the interest paid thereon did not exceed the rate prescribed u/s. 40(b)(iv), assessee was entitled to deduction u/s. 36(1)(iii) r/w section 40(b)(iv) for the A.Y. 1993-94 to 1997-98. The Assessing Officer considered the reply and observed that the contention that the advances were paid out of interest fee capital of the partners, was not acceptable in view of the decision of Hon'ble High Court of Punjab & Haryana in case of CIT V. Abhishek Industries, 286 ITR 1. According to him decision in case of Munjal Sales Corporation V. CIT which is also reported at 298 ITR 298 was distinguishable on facts. He further found that in case of Jay Ess Exports for which copy of account was file....
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....decision of Hon'ble Supreme Court in case of S.A. Builders, 288 ITR 1. He also submitted that in identical circumstances Hon'ble Rajasthan High Court in case of CIT V. Jugal Kishore (supra) held that proportionate interest could not be disallowed. 7. On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A). 8. After considering the rival submissions we find that there was opening debit balance of Rs. 4413287/- in case of Jay Ess Exports. No doubt certain purchases have been made from this party but for making purchases fresh payments have been made to this party and at all relevant time, the debit balances has rather increased during the year. We asked the Ld. Counsel for the assessee whet....
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....n. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. Above observation makes it clear that the authorities are required to examine whether there is commercial expediency or not? As stated earlier the Ld. Counsel for the assessee could not explain any commercial expediency in giving huge advances of Rs. 44 Lakhs to Jay E....