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2015 (12) TMI 1277 - AT - Income TaxDisallowance of interest computed @ 12% on advances given to sister concern - Held that:- As the details submitted shows that assessee is engaged in the business transactions with that company as these advances were given for the purpose of Printing and Dying Groups services for the assessee, it cannot be said that the advances are not for the purpose of the business of the assessee company. Further the assessee was having interest bearing fund of ₹ 36,21,707/- and non interest bearing funds of approximately ₹ 13.51 crores in the form of share capital and reserves and surpluses as at 31st March, 2009, therefore there is a considerable force in the arguments of AR that as it has more non-interest bearing funds available with it then the amount of alleged advances given to sister concern, the presumption of diverting the interest bearing funds used for giving this advances is not correct. Hon'ble Bombay High Court in case of CIT vs. Reliance utilities Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] has held that the principle for disallowance u/s 36(1)(iii) would be that if there are funds available both interest free and loans taken, then a presumption would arise that investment would be out of interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments . In the case of the assessee this presumption is established in view of huge interest free funds available with the assessee. Hence we delete the disallowance as interest @ 12% on advance outstanding to sister concern - Decided in favour of assessee. Addition as unexplained loans and advances - Held that:- We are convinced that loans and advances are outstanding as per the balance sheet of the company in case of two parties as at 31-3-2009 amounting to ₹ 1,41,71,094/- and the maximum outstanding balance at any time during the year of these two parties in aggregate amounts to ₹ 1,50,41,688/-. Therefore the actual balance outstanding is only ₹ 1,41,71,094. The note no. 6 in schedule no. 19 of the balance sheet as well as the auditor's report clearly describes so. The ld. AO as well as the CIT(A) both erred in reading the audited accounts of the company and making and confirming the addition. According to us and as details furnished there is no difference in the balance sheet of the assessee and therefore we delete the addition - Decided in favour of assessee. Addition on suspense account - Held that:- Suspense account is arisen out of various debits and credits which could not be identified by the assessee. Same were neither offered as income nor claimed as expenditure. Ultimately in financial year 2010-11 the assessee has written it back to the P & L Account and as it is not disputed that there is no difference between the tax rate of the current year as well as AY 2011-12, therefore we set aside this issue back to the file of AO for verifying the facts whether the suspense account written back has been offered to tax in Financial Year 2010-11i.e. AY 2011-12 and if so, delete the addition in the assessment year in the appeal. - Decided in favour of assessee for the statistical purposes.
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