2020 (9) TMI 369

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....e learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eyes of law and on facts. 2 On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in passing the order without giving assessee a proper and adequate opportunity of being heard in clear violation of principal of natural justice. 3 (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the disallowance on an amount of Rs. 11,49,085/- made by AO on account of interest under section 36(l)(iii) of the Act. (ii) That the disallowance was made despite the fact that the loans were given out of business expediency. (iii) That the disa....

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.... free advances were given as under: i. Madhav Capital services Rs. 10,00,000/- ii. Rajandeep Singh Tawana Rs. 31,00,000/- iii. Sunshine Infratech Rs. 2,00,00,000/- iv. Lease Plan India Limited Rs. 7,27,579/- v. STG Softech Rs. 50,00,000/- Total Rs. 2,98,27,579/- 2.1 The Assessing Officer questioned the allowability interest expenditure. In response, the assessee submitted that the advances were made for the business purpose to the subsidiary companies/sister concern, who was engaged in real estate business. The Assessing Officer rejected this contention as it was not supported by the documentary evidences. Accordingly, the Assessing Officer following the decision of the Hon'ble Allahabad High Court in ....

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....ds of Rs. 30,59,44,905/- which have been used to make these business advances of Rs. 2,98,27,579/- and the same is evident from the balance sheet (PB Pg. 11) that assessee owned surplus funds as under: Paid up Share Capital- Rs. 1,50,42,000/- Reserve & Surplus - Rs. 29,09,02,905/- Total - Rs. 30,59,44,905/- 4. The learned Counsel further submitted that it is a settled law that assessee is free to use its own funds the way it wants and the Revenue cannot compel the assessee to do or perform or use its funds in a particular manner. It is also settled law that when own funds are more than the funds utilized towards interest free advances, there cannot be any disallowance. In a scenario, where the interest free adv....