TMI Blog2006 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 12,33,625 on account of disallowance of interest under section 36(1)(iii) of the Income-tax Act, especially when the interest bearing fund was diverted for non-business purposes?" In short, the question that arises for consideration in this appeal filed by the Revenue is whether the Tribunal was justified in holding that the assessee is entitled to get the benefit of Rs. 12,33,625 by way of interest accrued on a particular transaction which the Assessing Officer had declined to grant to the assessee by adding the said amount in their total income in the assessment year 1995-96/1996-97. The assessee is a limited company engaged in the business of manufacture of resins and fatty acid. During the assessment year in question, it was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, the Revenue has come up in appeal. Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant and Shri S.R. Sarda, learned counsel for the respondent. Having heard learned counsel for the appellant and having perused the record of the case, we are inclined to dismiss the appeal and uphold the finding of the Tribunal recorded on the issue in question. This is how the Tribunal dealt with the issue in question in paragraph of the impugned order: "Paragraph 9.- We have considered the rival submissions carefully and have gone through the relevant material on record. We find force in the contention of the learned Authorised Representative. We find that the assessee is a manufacturer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction, it does not mean that the assessee cannot enter into any other transaction with that company. The current transaction is independent and is a genuine transaction as is evident from the various documents filed on record. In these circumstances, there is no justification of disallowance of interest for a transaction entered into for the purpose of business. Thus, we set aside the order of the learned Commissioner of Income-tax (Appeals) and delete this addition." A mere perusal of the aforesaid paragraph would indicate that the Tribunal went into the factual aspects of the case and having examined the factual documents brought on record at the instance of the assessee in support of the bona fides of the transactions in question, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t placing reliance on a case in reported in CIT v. Orissa Cement Ltd. [2002] 258 ITR 365 (Delhi) contended that the impugned order is liable to be set aside. That case is distinguishable on facts. Once the Tribunal upholds the genuineness of transaction then in such event, the benefit of the transaction has to be given to the assessee. There is no prohibition in law that the assessee can never advance the amount without charging any interest on the advance amount. Every transaction has got to be examined on its terms and conditions entered into between the parties and with a view to find out whether it is a genuine one, or not. In this case, the Tribunal did record a finding that it is genuine. Such finding as observed supra is binding on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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