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2021 (8) TMI 983 - ITAT AHMEDABADRejection of books of accounts - disallowance of loss for after rejecting the book of accounts by treating the loss claimed by it as bogus in nature - HELD THAT:- As decided in own case [2017 (1) TMI 1759 - ITAT AHMEDABAD] AO was erroneous as he has selected only few transactions on which only loss has incurred without giving cognizance to the fact that assessee has gained in other transactions with the impugned parties which are very well evidenced with the independent itemwise transaction details forming part of the books of account of assessee -In the present case when the assessee is maintaining regular books of account which are audited and all transactions are fully supported by bills and vouchers, impugned transactions have taken place through banking channels, confirmations have been received from the alleged parties no adversity has been found in the statements recorded by the Revenue of the alleged parties, quantitative records are regularly maintained, similar transactions have not been disputed even in the subsequent assessment u/s 143(3) of the Act as supported by the copy of the order u/s 143(3) of the Act for Asst. Year 2012-13 framed on 13.2.2015. We, therefore, hold that the impugned 15 transactions giving rise to loss of are genuine and cannot be termed as colourable with the intention of evasion of tax and ld. Assessing Officer erred in disallowing the same. - Decided in favour of assessee. Addition made on account of diversion of fund - disallowance of interest expenses - AR before us contended that the own fund and interest free fund of the assessee exceeds the interest-free advances, therefore he was of the view that disallowance of interest is not warranted - HELD THAT:- Admittedly the assessee has given interest free loan and advances amounting to ₹ 31,61,09,415/- and simultaneously incurred interest cost of ₹ 14,51,773/- only. The ld. AR before us contended that interest free funds were available with assessee which exceeds the amount of loan and advances given without charging interest. There cannot be any disallowance of interest expenses in a situation where the own fund exceeds the amount of interest free advances provided by the assessee. As such, there is a presumption that the interest free advances has been made by the assessee out of its own without involving any borrowed fund. In holding so we draw support and guidance from the judgment of Hon’ble jurisdictional High court in the case of CIT vs. Torrent Power Ltd [2010 (6) TMI 414 - BOMBAY HIGH COURT] Thus we hold that there cannot be any disallowance of interest expenses provided the own fund of the assessee exceeds the interest free advance. Accordingly, we direct the AO to verify whether the own fund of the assessee exceeds the amount of interest free advances and adjudicate the issue afresh in accordance with the provisions of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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