TaxTMI 
TaxTMI 
2018 (3) TMI 1998
X X X X Extracts X X X X
X X X X Extracts X X X X
....e at Rs.12,42,878/-. On perusal of the balance sheet and P&L A/c, it was noticed that the assessee has debited interest amounting to Rs.23,64,722/-in the P&L A/c in AY under appeal. It is also noticed that payment of interests on secured and unsecured loans that the funds raised by the assessee have not been utilized for the purpose of business and no income is accrued on account of utilization of these funds. The AO on going through the details submitted by the assessee perused that the assessee has made payment interest of Rs. 23,64,722/- and bank commission of Rs.21,42,095/-. The AO noted that the business of the assessee was sale and purchase of foodgrains on commission basis and earning income of "Ahrat". It has been perused from the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and, therefore, the interest paid thereon has been purely business expenses and allowable u/s 36(1)(iii) of the Act. Whatever case laws, the AO has applied for making the disallowance are distinguishable on facts which have been distinguished by the assessee and reproduced in the appellate order. It was submitted that the disallowance on account of interest paid on borrowed money is hypothetical and such addition is liable to be deleted. 4. Ld.CIT(A), however, confirmed the addition and dismissed the appeal of the assessee. His findings in para 4.2 of the appellate order are reproduced as under:- 4.2. "Ground no. 02 relates to disallowance of interest of Rs.45,06,817/- u/s 36(1)(iii) of the Act. The AO has observed that the business of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... utilization of loan taken from the bank, on which interest of Rs.23,64,722/- has been paid, for the purpose of business is not explained, nor is there any justification of advancement of moneys taken as secured and unsecured loan without charging interest though interest has been paid to the bank and the persons from whom unsecured loans have been taken. The appellant's AR has tried to distinguish the case laws relied upon by the AO in the assessment order but his observations are not applicable to the facts of this case brought out herein above, rather all the case laws are squarely applicable to the facts of this case. In this view of the matter, the addition of Rs.45,06,817/- made is sustained. This ground is accordingly dismissed. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xceeded the amounts advanced to the sister concern in all the years under appeal. Additionally the Tribunal had also noted that the Department could not point out any specific interest bearing borrowed funds, which had been diverted by the assessee to its sister concern. The findings of the Tribunal being based on the relevant evidence on record, no question of law, much less a substantial question of law, arose from the orders of the Tribunal." 6. Ld. Counsel for the assessee, therefore, submitted that since the assessee has sufficient funds other than the borrowed funds for giving to others, therefore, addition is wholly unjustified. On the other hand, Ld.DR relied upon the orders of the authorities below. 7. We have considered rival s....