2023 (2) TMI 763

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....nt year 2010-11 on 15.10.2010 declaring loss of Rs..25,65,746/- under normal provisions and book profits at Rs..33,47,141/-. The return was initially processed under section 143(1) of the Income Tax Act, 1961 ["Act" in short]. Subsequently, the case was selected for scrutiny under CASS and notices under section 143(2) and 142(1) of the Act were issued calling or the books of accounts. After considering the details furnished in response to the notices, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 28.02.2013 by assessing total income of the assessee at Rs..4,69,839/- after making disallowance under section 14A of the Act and disallowance of interest under section 36(1)(iii) of the Act. 3. With rega....

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.... assessment order, the Assessing Officer has observed that the assessee had granted interest free loan of Rs..73,69,000/- to OMSL and Rs..50,01,777/- to CIPL while the assessee paid interest of Rs..99,86,153/- for the loans availed by it from various banks to the tune of Rs..6,18,20,968/-. Since the assessee was paying interest @ 14% to the loans availed from the banks, the Assessing Officer charged the interest @ 14% on the interest free loans granted to its subsidiaries and disallowed the interest expenses to the extent of Rs..17,31,909/-. In the appellate order, the ld. CIT(A) has observed that the borrowed funds and own funds were mixed and it cannot be said that the interest free advances were only out of own funds. Therefore, the ld. ....