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2015 (11) TMI 293 - AT - Income TaxRevision u/s 263 - Disallowance of interest u/s 36(1)(iii) - Held that:- AO asked details of the loan and advance being balance-sheet items (asset) and no question was raised on allowability or disallowability of the interest. Even the AO did not go into the point of interest-free advance in the question asked from the assessee. Thus merely asking the details of loan and advance without questioning the claim of the interest would not by any stretch of imagination raise a presumption that the issue of allowability of claim of interest was in the view of the AO. Further, the assessment order does not remotely indicate any thing that there was any thought process by the AO on the interest claim. Rather the AO's query was restricted to the balance sheet item and does not touch the profit and loss account of the assessee. Therefore, we are in complete agreement with the CIT that there is a lack of inquiry on the part of the AO which renders the assessment order erroneous so far as it is prejudicial to the interests of the revenue. Rejection of TDS credit - AO rejected the claim of the credit of the said amount of TDS u/s 194C towards mobilisation advance on the ground as such credit cannot be allowed when the corresponding receipt has not been offered to tax - Held that:- As decided in assessee's own case for the assessment year 2002-03 as held if the amount is a mobilisation advance and not an income at all, the question of paying income tax would net arise. When the gross receipts is offered and in that assessment year he has suffered loss, the question of paying any tax on the said amount also does not arise. A conjoint reading of Sections 194C, 199 & 237 of the Act makes it clear that if there was no liability to pay tax, the TDS paid is liable to be refunded and that is absolutely what the Tribunal has stated. - Decided in favour of assessee. Disallowance of interest on account of interest-free advance made to Shri Manohar Shetty - Held that:- Interest-free loan was given from borrowed fund. In view of our finding on this issue for the assessment year 2006-07, we uphold the impugned order of the CIT(A) qua this issue as the argument that the interest free loan had been given for the purpose of facilitating the procedure of getting the work contract from NHAI does not appeal to reason and therefore fails to fulfill the test of preponderance of probability and also commercial expediency. In short, it cannot be held that the loan was for the purpose of business. It is by chance and opening balance was there which was made a cog in the wheel of the reverse engineering. Besides it is admittedly not from own funds. Besides, MS cannot be held as a sister concern of the appellant. Therefore A.O. is justified to treat the interest receivable from MS as the income of the appellant - Decided against assessee.
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