TaxTMI 
TaxTMI 
2022 (11) TMI 663
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.... case are that the assessee is a limited company engaged in construction and installation work. Loss of Rs.20,84,81,814/- declared in the return of income filed for the Assessment Year 2012-13. After the case being selected for scrutiny under CASS and serving notice u/s 143(2) & 142(1) of the Act, various details were called for and after considering the submissions of the assessee, the ld. Assessing Officer assessed loss income at Rs.13,68,94,750/- after making certain disallowances/additions. The assessee challenged the addition before the ld. CIT(A) and partly succeeded and now the assessee is in appeal before the Tribunal raising the sole issue challenging the ld. CIT(A)'s finding confirming the addition for disallowance of interest mad....
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....the purpose of business of profession. It has been repeatedly held by the Apex Court that the expression "for the purpose of business" wider in scope than the expression "for the purpose of earning profits". 7. On perusal of the finding of the Hon'ble Supreme Court, the important aspect is the term "commercial expediency". It is not in dispute that the assessee has given interest free advances to certain related parties and it is also not in dispute that the assessee has utilized such borrowed funds for giving the advances. This fact has been rightly incorporated by the ld. Assessing Officer in the assessment order wherein, the total share capital, reserve & surplus and trade payables and other liabilities are of Rs.52,82,44,606/- and tot....
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.... any purpose other than the business, the deduction of interest is not allowed. In the present case, the Appellant had borrowed funds from bank and paid interest on the same. The Ld. AO did not dispute the factum of borrowing of loan or the liability to pay interest. However, he refused to allow deduction on the ground that the Appellant has advanced substantial amount to related parties without levying interest. From that fact, the Assessing Officer inferred that the amount from the financial institution was not borrowed by the Appellant for its business and on the other hand, the real beneficiary were the related parties. I find that the AO's contention that advance was made out of the borrowed funds has credible basis and the Ld. ....
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....ove factual position based on the submission of the Appellant, it is noted that the Appellant had granted interest free advances to M/s Govinda Eastern Developers Pvt. Ltd. It is also noted that the Appellant had extended the advance to the said concern so in order to acquire the land of the Company located at Rajarhat, Kolkata and that the Appellant had taken possession of the said land. Thus, clearly interest has been paid w.r.t. acquisition of a capital asset prior to the said capital asset being put to use and therefore the interest cost in regard thereof is liable to be disallowed in view of Explanation to Section 36(1)(iii) of the Act. I further note that the Appellant had also granted interest free loans to two other parties namel....
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....the Assessing Officer and the submissions of the assessee, we find that the assessee has not specified the commercial expediency part in all the above stated three advances. As far as the amount given to M/s. Govinda Eastern Developers Pvt. Ltd., is concerned, which is claimed to have been given for acquiring a land, nothing has been brought on record to show that whether this land was acquired as part of the project of the assessee company or was part of an investment in an immovable property. The onus is on the assessee to show that this deal was for commercial expediency purposes and the said sum was part of the stock in trade for the land so purchased. Even after being provided various opportunities by the lower authorities, the assesse....