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2017 (1) TMI 1321 - AT - Income TaxPenalty u/s 271(1)(c) - nexus between the advance bearing funds and the loan advanced to the partner - Held that:- The undisputed facts that emerged from the record are that the assessee firm had advanced a loan of ₹ 2,56,76,179/- on which no interest has been charged assuming that the assessee was having interest free funds in the form of capital introduced by the partner and the other interest deposits of ₹ 10,74,969/- and ₹ 2,12,284/- respectively, even than the money so advanced exceeded the interest free funds. There is no dispute with regard to the fact that this loan was given out of the interest bearing funds on which the assessee had claimed interest. Under these facts, we are unable to accept the submission of the ld. Counsel for the assessee that the issue is squarely covered by the judgment of Hon’ble Supreme Court rendered in the case of Reliance Petroproducts Ltd. (2010 (3) TMI 80 - SUPREME COURT ). The assessee has not placed any material suggesting that the issue is debatable in view of the fact that there is a direct nexus between the advance bearing funds and the loan advanced to the partner. Therefore, we do not see any infirmity in the order of ld. CIT (A), the same is hereby affirmed. - Decided against assessee.
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