TMI Blog2012 (7) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of Mohit Overseas (P) Ltd. that the assessee had been giving as well as taking loan from the said party and interest was being paid and charged at the same rate, therefore we find force into the contention of the assessee that such transactions were for business purposes. In view of this, no addition was called for - in favour of assessee. - ITA No.601/Ahd/2010 - - - Dated:- 7-6-2012 - Shri, A.K.Garodia, And Shri Kul Bharat, JJ. Respondent Shri B.L. Yadav, SR-DR O R D E R PER Kul Bharat, Judicial Member:- This appeal of the assessee is against the order of Ld. Commissioner of Income-tax (Appeals)-I, Surat dated 15-01-2010 for the assessment year 2007-08. Sole ground has raised by the assessee reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecured loan. The AO disallowed interest expenses of Rs.73,500/- on account of interest free loan has been given to Shri Bony N Dalal. It is submitted by assessee that the case of assessee was directly covered by Special Bench judgment and judgment of Hon ble Supreme Court in the case of JCIT v. ITC Ltd. (2008) 112 ITD 57 (Kol) (SB) and Munjal Sales Corporation v. CIT Anr. (2008) 215 CTR 105 (SC). It is submitted that in both judgments, it has been held that where assessee has sufficient interest free funds in the form of capital reserve and interest free borrowing to cover interest free advances then no disallowance of interest u/s. 36(1)(iii) can be made. It is submitted by the assessee that the assessee had sufficient interest free fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is additional facilities to the assessee as amounts can be given and received as per requirement and availability of funds. As against this, the loans given by the assessee were in the nature of fixed loan . Thus, there was basic difference between this current account and the fixed loan given. Interest on this current account at 12% as per interest on this current account was applied (paid/charged) @ 12% p.a. as per rate so agreed with this party. While interest on fixed loan given was charged @ 9% as they were fixed nature and interest agreed with them was at 9% pa. It is submitted that in this account the interest was paid as well as charged. Had there been excess debit balance for longer period then net interest would have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance u/s. 14A is to be reduced. Otherwise, there will be double taxation i.e. one by disallowance made u/s. 14A by considering whole amount as interest allowable and then by making further disallowance out of the whole amount. It is therefore, submitted that AO in that case, be directed to reduce the disallowance u/s. 14A in case any portion of interest paid is disallowed and sustained by the Tribunal. 5. Ld. SR-DR supported the orders passed by authorities below. 6. We have heard the Ld. DR perused the materials available on record and the judgments cited by parties. We find that Ld. CIT(A) has dealt with this issue in para-4.1 to 4.3 of his order, same is reproduced hereinbelow:- 4.1 I have considered the submission made by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n V Dalal, it is seen that the assessee has given loan at 9% and the same has been admitted by it but it had stated that interest has been shown only upon 31.12.2006 on receipt base. The AO, therefore, rightly added the interest upto March and the addition made by the AO is confirmed. In respect of all these disallowances there is reasoning given by the Ld. CIT(A) for confirming the disallowance that the assessee could not make out a case that there was any commercial expediency to take the loan at higher rate @ 12% and giving loan @ 9%. It is evident from the findings of Ld. CIT(A) that he has not examined whether the advances given by the assessee were out of interest free fund or from the interest bearing borrowed capital. The content ..... X X X X Extracts X X X X X X X X Extracts X X X X
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