TaxTMI 
TaxTMI 
2022 (6) TMI 1556
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....A.Y. 2005-06 in ITA 472/PN/10 dated 25.06.2013 in A.Y. 2004-05 and 2005-06 has already rejected its claim in light of interest free funds turning out to be more than the alleged interest bearing funds diverted to sister concern(s) as follows :- "13. We have carefully considered the rival submissions. In this case, the Assessing Officer noted that assessee advanced loans to the sister concerns amounting to Rs. 9,28,96,036/-, on which no interest was charged. As per the Assessing Officer, on one hand assessee was paying interest on funds borrowed and claiming the same as deduction while on the other hand, it was advancing loans to its sister concerns free of interest. As per the Assessing Officer, the advances to the sister concerns were not in the course of business. The Assessing Officer also came to conclude that the assessee has advanced interest-free loans to the sister concerns out of borrowed funds only. Therefore, the Assessing Officer disallowed interest proportionate to such interest-free advances, which is determined at Rs. 54,92,463/- (i.e. Rs. 29,63,659/- + Rs. 25,28,804/-). 14. The contention is that assessee generated sufficient interest-free funds of....
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....est bearing, then the presumption is that the impugned interest-free advances made to the sister concerns are out of interest-free funds available with the assessee company as the interest-free funds are sufficient to cover the impugned interest-free advances made to the sister concerns. Therefore, the disallowance of interest expenditure made by the Assessing Officer becomes untenable. 16. The Assessing Officer in para 4.8 of the assessment order has observed that assessee has advanced interest-free fund to the sister concerns out of interest bearing loans taken from various banks. In coming to such conclusion, the Assessing Officer tabulated the total loans from the banks as on 01.04.2004 at Rs.21,89,94,220/- and also noted the balances standing in the current account with the banks as on 01.04.2004 at Rs. 7,81,313/-. As per the Assessing Officer, this showed that there was a negative balance in the bank accounts amounting to Rs. 21,82,12,907/- as on 01.04.2004. Thereafter, the Assessing Officer has tabulated the movement of the bank accounts and stated that whenever a loan was advanced to any sister concern, assessee was having negative net balance in the bank accounts ....
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....of interest bearing loan amounts. Further, assessee submitted that the current account maintained with banks were also not funded with interest-bearings funds to facilitate interest-free advances to the sister concerns. The learned counsel at the time of hearing explained the position further and submitted that funds were advanced from the current accounts maintained with the banks, and the same has also been noted by the Assessing Officer in para 4.8 of the assessment order, and in such current accounts interest-free funds were deposited in the form of receipt their customers, interest-free loan advances, etc. and therefore it could not be said that the loan accounts have been utilized for giving advances to the sister concerns. 17. Considering the factual position in the present case, we are unable to uphold the inference of the Assessing Officer that the interest-free advances to the sister concerns have been paid out of loan funds. Therefore, on this aspect also assessee has to succeed. Another plea raised by the Revenue is that if assessee was owing sufficient surplus interest-free funds to cover the impugned interest-free advances to the sister concerns, there was no....
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....e assessee had claimed set off of carried forward loss against the current business income of Rs.25,95,525/-. The deduction claimed u/s.80IA of the Act is adjusted against income from house property of Rs.33,17,498/- and income from other sources of Rs.4,87,478/-. The assessee relied on the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs ACIT 38 DTR 57 wherein the deduction is allowable. It had been contended that as far as the initial assessment year for the purposes of said deduction, the same will be the year in which deduction has been claimed by the assessee for the first time and not the year of installation of the wind mill facility. The assessee company has arrived at this amount of deduction claimed by adding back the depreciation of Rs. 57,51,123/- to the profit of Rs. 54,96,451/- shown in the profit and loss account of the Bhambe Branch. The assessee had claimed that provisions of section 80IA(5) of the Act do not find application to the case of the assessee in view of the decision referred to by the assessee. The AO was of the view that the contention of the assessee that the losses of the eligible unit on standalone basis....
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....w of the above, the decision in Velayudhswamy has now attained finality and the assessee is entitled to the deduction u/s 80-IA. It is clear that initial year is not necessarily the year of setting up of the undertaking. As held by the Hon'ble ITAT is our own case the initial year is A.Y. 2004-05 (year when claim of deduction was made for the first time) though the year of setting up of the undertaking was A.Y. 2001-02. Secondly losses of years prior to initial year (A.Y. 2004-05 in our case) which was otherwise absorbed in the respective years cannot be reduced while quantifying the amount of deduction. The deduction as claimed by the assessee deserves to be allowed in the manner as directed by the Hon'ble ITAT in assessee's case for AY 2005- 06." 8.3 DECISION :- I have decided this issue in favour of appellant for A.Y. 2006-07 in Appeal no. PN/CIT(A)-4/DCIT, Circle-6, Pune /328/ 2009-10 Date of Order : 17/02/2017, holding in para 7.3 of the said order as below - "7.3 DECISION :- I have perused the assessment order and the submission made by the appellant as above carefully. I find from the submission of the appellant has quoted above that the i....