2022 (1) TMI 1036

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....ment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 03.12.2018. 2. Drawing our attention to the grounds of appeal, Ld. AR assailed the disallowance, inter-alia, by submitting that the borrowed funds as obtained by the assessee were for specific purpose only. Further, own funds were sufficient to advance to group entities. The Ld. AR also submitted that the loans were granted in earlier years and only a part of loan was granted during this year and therefore, disallowance was not justified. The Ld. DR controverted the same by submitting that the assessee was to show availability of interest free funds on the dates on which loans were advanced to group concerns. 3. Having heard rival submissions and after going through t....

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....for business purposes and investment was necessary to make business operational. The second entity was stated to be engaged in similar civil construction business. Therefore, the investments were out of commercial expediency. The attention was also drawn to the fact that the assessee had capital balance of more than Rs. 5 Crore besides advances received from flat buyers. However, Ld. CIT(A) concluded that the capital balance was fully utilized for personal investments and deposits and the assessee did not have free reserves to make interest free advances of Rs. 12.33 Crores. Further, the assessee could not establish the commercial expediency of making these investments. Finally, interest component of Rs. 10.72 Lacs was held to be disallowab....