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2018 (12) TMI 1493 - AT - Income TaxAllowability of busniss expenses - expenses on premium payment - disallowance as no business income was declared - Held that:- AO has not adduced sufficient reasons to assert that the appellant was not engaged in business activities. Whereas he has base his conclusion on the fact that no business income was declared, the fact that the sale of the property did not take place due to various reasons during the year cannot automatically imply hat no business is carried on. This is particularly true of a case where a legal dispute exists. The appellant is a partnership based on a registered deed which is part of the record. Business assets exist in the balance sheet and bank loans support these assets. For the immediately preceding year in appeal before it on similar grounds, the Ld. ITAT Bangalore Bench has fund that the appellant did engage in business activity. It is inconceivable that a businessman can be engaged in business activities in an intermittent manner from year to year, when the sale of operations and quantum of loans raised by the appellant are considered. In view of the above - the appellant is actually engaged in the business of development and sale of real estate, and that the expenses on the premium payments are allowable u/s 37(1). - Decided in favour of assessee Allowability of partnership insurance premium - Held that:- For these two years paid by the firm being the insurance premium in the nature of keyman insurance premia and regarding allowability of expenditure issue, no ground has been raised by revenue in the these two appeals filed before Tribunal for these two years. Since no difference in facts has been pointed out by ld. DR of revenue in present two years i.e. Assessment Years 2013-14 and 2014-15, in our considered opinion, in view of the principle of consistency, the order of CIT(A) does not contain any infirmity on this issue in both these years Disallowance of interest expenditure - interest free advances given by the assessee firm to its three sister concerns - Held that:- It is seen that the interest free funds available with the assessee is much more than the interest free advances given by assessee firm to its sister concerns. In the light of these facts, we examine the applicability of the judgments of Hon’ble Bombay High Court rendered in the case of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and of Hon’ble Karnataka High Court rendered in the case of CIT vs. Brindavan Beverages Pvt. Ltd.[2016 (10) TMI 1242 - KARNATAKA HIGH COURT]. As per para 10 of this judgment of Hon’ble Bombay High Court, it is held that if interest free funds available with assessee is sufficient to meet its investments and at the same time, the assessee has raised a loan, it can be presumed that the investments were from the interest free funds available and in that situation, no disallowance can be made out of interest expenditure. CIT(A) was not justified in making disallowance out of interest expenditure in respect of interest free advances given by the assessee firm to its three sister concerns because the interest free funds available with the assessee as on 31.03.2014 of ₹ 35.17 Crores is higher than the interest free advances given by the assessee firm to its three sister concerns - Decided in favour of assessee
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