2024 (8) TMI 755

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....rest income received on fixed deposits amounting to Rs. 1,87,44,483/- and netting off of interest receipt on bank fixed deposits with interest expenditure capitalized in the closing work-in- progress. 2. The brief facts of the case are that the assessee company is engaged in the real estate business of development and construction of residential and commercial premises and had filed its return of income on 30.09.2015, declaring loss of Rs. 4,84,78,892/-. The assessee's case was selected for limited scrutiny and notice u/s. 143(2) and 142(1) were duly issued and served upon the assessee for the purpose of verifying the interest income received out of the fixed deposits which has not been offered to tax by the assessee in its return of inc....

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....r's contribution for the business was a requirement. The ld. AR contended that the fixed deposits are not out of the surplus funds and is only an arrangement for availing banking facility. The ld. AR also stated that the interest out of the said fixed deposits has direct nexus to the business of the assessee and that the assessee had rightly netted off the interest income with the interest expenses during the year under consideration. The ld. AR relied on the various decisions in support of the assessee's contention. 7. The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said facts and relied on the order of the ld. A.O. 8. We have heard the rival submissions and perused the materia....

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....t the loan advance by the assessee to its following related parties without charging interest : i. Lucifer Construction P. Ltd. Rs. 1,83,61,89,768/- ii. Nestor Construction P. Ltd. Rs. 25,21,39,236/- iii. Blanca Properties P. Ltd. Rs. 24,49,50,605/- iv. Somnus Properties P. Ltd. Rs. 41,87,16,084/-   Total Rs. 2,75,19,95,693/- aggregating to Rs. 2,75,19,95,693/- was not for business exigency for the reason that when the assessee itself was paying interest on the borrowed funds, there is no justification in holding that it had advanced interest free advances to its subsidiaries. The ld. A.O. relied on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Abhishek In....