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2018 (4) TMI 519 - AT - Income TaxDisallowance u/s. 36(1)(iii) - loans for business expediency - Held that:- The company has mostly taken loan and advances from related parties. The company has to pay interest to Rasandik Engineering Industries India Ltd. for affect that this company is a public limited company and it cannot be given interest free loan / advance to Ganesha Securities Pvt. Ltd. Rasandik Auto Components Pvt. Ltd. is a subsidiary of Rasandik Engineering Industries Ltd. and therefore, the same condition as mentioned above applies in this case as well. In earlier years similar additions were made and such notional interest as was added in those years were deleted by the CIT(A) in respect of assessment years 2010-11 and 2011-12. We find considerable cogency in the contention of the Ld. AR that the fact situation remains the same as in earlier years and as a matter of fact the interest expenditure has almost halved compared to last year. These loans are not new but were made a couple of years back for business expediency out of own surplus funds (which is evident from para 4.11 of the assessment order) wherein it was stated that the funds advanced are more than the loan bearing funds. It was also pleaded that the loans that were issued afresh this year (in addition to the loans extended in earlier years) amounts to only ₹ 8 lakhs. Keeping in view of the facts and circumstances of the case and on the basis of consistency principles, the addition in dispute is deleted and accordingly, the ground raised by the Assessee stand allowed.
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