TaxTMI 
TaxTMI 
2020 (3) TMI 1220
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.... stage of this Tribunal and the Tribunal was pleased to restore the issue to the file of assessing officer for deciding the same afresh after considering submissions of the assessee. However, the addition which was originally made on the basis that the assessee has filed only a written explanation but has not provided the evidences proving nexus between the expenditure incurred and the interest free fund available. 4. Aggrieved against this, the assessee preferred an appeal before Ld. CIT(A), who after considering submissions sustained the addition. Now, the assessee is in further appeal before the Tribunal. 5. Ld. counsel for the assessee reiterated submission as made in the written submission. The submissions of the assessee are reproduced as under: The Brief Facts of Appeal as filed by the assessee are as under:- S.No. Particulars Relevant Date/Amount 01. Income Tax Return for the Asst. Year 2009-10 was filed by the Assessee on 29.09.2009 declaring Total income at 29.09.2010 Rs. 35,45,190/- 02. Assessment was framed by the Assessing Officer u/s 143(3)/254 on 22.12.2017 assessing Total Income at 22.12.2017 Income Assessed Rs. 43,07,620/- 03. The Assessee has....
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....gainst the said order passed by the Ld. CIT(A) Maintaining the said disallowance as made by the A.O. out of Interest paid of Rs. 5,53,024/- vide order u/s 143(3)/254 of the Income Tax Act. 01]. GROUND No. 1 1.1] The assessee in this ground of appeal has challenged the disallowance of Interest of Rs. 5,53,024/- out of Total Interest payment. 1.2] That in the said ground of appeal the assessee has challenged the disallowance of interest of Rs. 5,53,024/- on the value of Investment in Fixed Assets namely Oil Mill Machinery of Rs. 34,35,045/- and Oil Mill Building of Rs. 20,95,190/- totaling to Rs. 55,30,235/- made @ 10 % of Rs. 5,53,024/- out of Total Interest paid. 1.3] The assessing officer while passing the assessment order observed that the assessee has taken Secured and Unsecured Loan which have increased by more than 2.89 Crores and Rs. 2.75 Crores respectively from immediately preceding year and on which it has paid Interest thereon and the assessee has made Investment in Fixed Assets namely Oil Mill Machinery of Rs. 34,35,045/- and Oil Mill Building of Rs. 20,95,190/- totaling to Rs. 55,30,235/- during the year. The Assessee has submitted during the Assessment Proceedi....
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....here be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd. (supra) had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (supra) where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcomber's case (supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the overdraft account of the assessee and in such a case it sh....
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....ons of both the parties and have perused the material available on record. We find that the ld. A.O. has failed to establish that interest free advances to above stated parties were out of interest bearing funds. It is the contention of the assessee that it had sufficient non-interest bearing funds to the tune of Rs. 16.88 crores as per balance sheet as on 31.03.2010 as against interest bearing funds at Rs. 23.26 crores. Hence, interest-free funds of Rs. 16.88 crores have been utilised for giving interest-free advances of Rs. 5.75 crores to aforesaid above parties on which no interest was charged or less interest was charged. Thus interest-free advance were given out of interest-free funds available with the assessee during the year for which sufficient interest-free funds were available. Therefore, we are of the view that the Ld. A.O. has failed to establish that interest free advances to above stated four parties were out of interest bearing funds. We find that the AO has not been able to establish the nexus between interest bearing funds utilized for non business purpose as held in above quoted decision of Hon`ble Supreme Court. The ld. A. R. has placed reliance in thecase of CI....