2020 (1) TMI 961

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....allowance of Rs. 45,11,593/- under section 36(1)(iii) out of interest payment on the ground that borrowed funds has not been utilised for business purpose. 2. That the Ld. CIT(A) was not justified in completely discarding the specific submission regarding the fact that advances to SKIPL were not given in the A.Y. 2013-14 and thus the order of Ld. CIT(A) is perverse and deserves to be set aside. 3. The Ld. CIT(A) was not justified in sustaining the disallowance of Rs. 45,11,593/- under section 36(1)(iii) out of interest payment on the ground that borrowed funds has not been utilised for business purpose without appreciating the ratio of decision rendered by the Supreme Court in S.A. Builders Ltd. Vs. CIT (2007) 288 ITR 1 (S....

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....001/- as other advances from M/s. S.K. Infrastructure Pvt. Ltd. in the schedule 12 of the Loans and advances forming part of the audited accounts. The A.O. therefore, called upon the assessee to explain vide questionnaire u/s 142(1) of the Act dated 25.2.2016. In response thereto, the assessee company replied that the amount was given for constructing building which would be used by the assessee company in future. However, the A.O. did not accept this contention of the assessee and therefore made disallowance of Rs. 45,11,593/- u/s 36(1)(iii) of the Act. Further, the A.O. also noticed that there was a difference in the interest as disclosed by the assessee accrued on FDR and as reflected in form 26AS. As per the assessee, the interest wa....

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....t (India) Ltd. (2016) 180 TTJ 228 (Jaipur). We find force in this contention of the assessee. Under the identical facts, the coordinate bench of this Tribunal in the case of ACIT Vs. Auto Light (India) Ltd. (supra), has observed that from perusal of balance sheet, it is clear that though there is increase of share capital, but simultaneously, there is also increase in the loan and fixed assets of the assessee company. Therefore, the assessee was required to prove whether on the date of making investment or giving the interest free amount to the sister concern, the assessee was having sufficient interest free funds available with it. For that purpose, the assessee should demonstrate from its cash flow statement and bank account that it ha....