TMI Blog2010 (4) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... account of Smt. Shashi Gupta and Master Nitin Gupta at Rs. 25 lakhs each. The explanation of the assessee before the Assessing Officer was that Shri Vijay Kumar is a partner in the assessee-firm in his capacity as karta of Vijay Kumar (HUF). There was credit balance of Rs. 1,80,25,443 for which no interest is being paid and since the above two persons were members of the Hindu undivided family, the firm had given interest free advances to them because of substantial credit balance in the account of the Hindu undivided family. The Assessing Officer rejected the explanation and calculated the interest at the market rate at 18 per cent. at Rs. 15,44,754 disallowed the interest equal to this amount out of the interest claimed by the assessee. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of turnkey projects. The assessee filed its return of income for the assessment year under consideration declaring a total income of Rs. 2,64,42,974. The Assessing Officer (AO) on examination of the account books of the assessee noticed that the assessee made an advance of Rs. 50 lakhs to Air Construction Consultant Pvt. Ltd., Calcutta and during the year, the debit balance was transferred to the account of Smt. Shashi Gupta and Master Nitin Gupta at Rs. 25 lakhs each. The explanation of the assessee before the Assessing Officer was that Shri Vijay Kumar is a partner in the assessee-firm in his capacity as karta of Vijay Kumar (HUF). There was credit balance of Rs. 1,80,25,443 for which no interest is being paid and since the above two pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of substantial credit balance in the account of the firm and accordingly, disallowance of Rs. 15,44,750 has been deleted. 4. Shri Rajeev Shrivastava, learned counsel for the appellant/Revenue vehemently argued that the Assessing Officer on the basis of accounts submitted by the assessee found that the assessee has suffered a huge interest burden of Rs. 42,45,766 (actual interest burden as per the account furnished by the assessee is to the tune of Rs. 2,00,31,206) during the year under consideration as against Rs. 1,65,84,102 of the preceding assessment year and accordingly, it has been held that advances to the members of the Hindu undivided family were for non-business purposes. It was held that where the amounts were borrowed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opening balance and sufficient profit has been earned during the year, out of which the said amount has been given and it is not the case of diversion of borrowed funds. The Tribunal on due examination of the balance-sheet of the assessee and after considering the material available on record has categorically recorded a finding of fact that no evidence has been brought on record to prove that the amount borrowed by the assessee for its own business but were diverted as advances to the members of the Hindu undivided family free of interest and there is credit balance of Rs. 1,80,25,443 in the account of the Hindu undivided family of the assessee with the firm for which no interest is being paid. The finding of the Tribunal being based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the party had intimate connections and it was not for the purposes of business of the assessee. The Tribunal, considering that no evidence except oral claim that the flat was booked for the purpose of the assessee-firm, affirmed the order of the Income-tax Officer and the Commissioner of Income-tax (Appeals) and dismissed the appeal of the assessee. 11. In the matter of Munjal Sales Corporation [2008] 298 ITR 298 (SC), the assessee advanced interest free loan to its sister concern amounting to Rs. 5 lakhs. The Tribunal, considering the noting on record to show that loans were given to the sister concern by the assessee-firm out of its own fund, held that the assessee was not entitled to claim deduction under section 36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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