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2016 (7) TMI 313 - AT - Income TaxRevision u/s 263 - Interest free loans and advances have been given to one of the Directors and to the related companies in which the Directors are interested - interest dis allowance - Held that:- The loans availed are basically for specific purposes like purchase of assets, i.e., cars and it was explained that HDFC Inventory Floor Funding amounting to ₹ 382.33 lakhs was sanctioned during the year for the purpose of purchase of goods and the corresponding interest for the loan availed is only ₹ 10,81,911/- which is marked in Schedule-15. Whereas, the proportionate interest disallowance has been worked out by the Ld. CIT(A) at ₹ 72,83,333/-. It was explained that there is no diversion of funds to related parties other than normal business transaction and the amount shown as advance to Koyenco Autors (P) Ltd. is in the nature of rent advance and classified under “Loans & Advances”. The building belongs to them and the assessee is pay in grent of ₹ 60 lakhs for that building. The building is used as show room and service centre. As regards advance in the name of the Director, it was in connection with business requirements of the Company and the loan advances were not paid out of borrowed funds. The Assessing Officer was satisfied that there was no diversion of funds during the assessment proceedings. Since the loans/advances have been given for the specific purpose, therefore, the view taken by the Ld. CIT(A) is not a correct view and there cannot be any occasion to come to the conclusion that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Ld. CIT(A) himself in para 5 of his order reproduced hereinabove has mentioned that the assessee was paying heavy interest to the financial institutions for acquiring capital assetsand for working capital requirements. No finding has been given as to how theorder of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue - Decided in favour of assessee
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