9911796707
TMI Blog2012 (7) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... peared on behalf of the assessee, however written submissions are on record. Therefore, we proceed to hearing this appeal. 3. The facts of the case are that assessee is a company, filed its e-return of income for A.Y. 2007-08 showing total income of Rs.3,12,6.650/-. Subsequently, the case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assesseecompany had received interest on account of loan given and has also given interest on account of loan/advance taken by assessee-company. It was observed by AO that assessee-company had received interest @ 9% p.a from the loan given but the assessee had paid interest @ 12%. The AO made disallowance on account of interest expenditure cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved but he did not consider aforementioned case laws. In respect of Mohit Overseas Pvt. Ltd. the AO had disallowed interest to the tune of Rs.45,903/- on account of that interest was paid to Mohit Overseas Pvt. @ 12% while interest had been charged on loan given @ 9%. It is submitted by assessee that loan on account of Mohit Overseas Pvt. was in nature of current account, wherein funds were received and paid on regular basis as per requirement of the assessee and Mohit Oversea Pvt. During the year, there was both debit balance as well as credit balance of this loan account. From the ledger account of Mohit Overseas Pvt. Ltd., it is evident that it was not a fixed loan but was a current account. In this account loan was given as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt while interest charged was @ 9%. It is submitted that there was no comparison with the loan as one was fixed loan and other was current account. Therefore, making disallowance is wrong. Further, in respect of advance given to Niranjan Dalal, it is submitted that this advance was given for property. As per terms of advance, it was agreed that interest will be paid only for period upto 31-12-2006. It is further submitted that even otherwise also the assessee had sufficient interest free funds available in the form of share capital reserves and interest free unsecured loan to this advance. It is submitted that case is covered by the judgment as relied. Further, it is submitted that without prejudice to submission made hereinbefore disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % on the loans and advances given to other parties. Neither during the assessment proceedings nor during the appellate proceedings the appellant has been able to make out a case hat the assessee has commercial expediency to take the loan at higher rate, i.e. 12%. Therefore, the disallowance of interest to the extent of Rs.45,903/- over and above 9% is in order and this disallowance is confirmed. 4.2 With respect to the interest free loan given to Shri Bony N Dalal of Rs.14,00,000/-, it is seen that the appellant has not given any evidence to show tat the loan was given for commercial expediency as per the decision of the Hobn'ble Supreme Court in the case of S.A. Builder. If the assessee has diverted interest bearing funds to its directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance-sheet of assessee for the year under consideration, it is transpired that the assessee was having share capital of Rs.30,515,000/-, reserves and surplus of Rs.15,80,710.41 and unsecured loan of Rs.11,99,055/-. The assessee had given loan to Shri Bony N Dalal of Rs.14 lakh and Shri Niranjan V Dalal of Rs.20 lakh. However, in respect of Mohit Overseas (P) Ltd, the assessee was holding a current account, wherein both the parties had debit and credit balance at different point of time. It is submitted by the assessee that in respect of this account the interest @ 12% p.a. was charged as well as paid. The transactions were eventually effected for business purpose. 7. In the light of above discussion, we are of the considered opinion that w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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