TMI Blog2012 (11) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not correct. As the loan was given during the year, interest even on notional basis can be calculated for the days of use only though under the facts and circumstances, the same was not required - AO has not shown any nexus between interest bearing funds and the amount advanced at a lesser rate of interest. Thus, basically the nexus itself is not established - addition deleted – In favor of assessee Disallowance on account of payment of PF and ESIC – alleged that same were not paid within the due date provided in the relevant statute - Held that:- Amount in question has been paid before the due date of filing of return – disallowance deleted – In favor of assessee - ITA no.2897/Ahd/2007 - - - Dated:- 25-1-2012 - SHRI D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is carefully considered but the same is not acceptable. Regarding transaction with M/s. Millenium, nothing concrete is brought on record to prove that the recovery of capital is doubtful, Regarding Bajaj Chemical Products also, nothing concrete is brought on record to prove that this is a trade advance. As stated above, the interest bearing funds has been given to outsiders without charging any interest is therefore there is diversion of business profits. Since the assessee has paid interest @ 15% the interest component @ 15% in the case of above two parties comes to %Rs.4,89,75Q/-. The interest claim is reduced by Rs.4,89,750/-." 3. Aggrieved by the order of the AO, the assessee went in appeal before the learned CIT(A). Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated time and accordingly it was not prudent to charge interest. The appellant further submits that the AO had calculated notional interest presuming that the loan was given on the first day of accounting year, which is not correct. As the loan was given during the year, interest even on notional basis can be calculated for the days of use only though under the facts and circumstances, the same was not required. The appellant further submits that the AO had incorrectly presumed that the appellant had given amount of Rs.20.65 lacs for the entire year to Bajaj Chemicals Products. The appellant had placed on record of the AO copy of account of both account as well as a/c. of Millennium and therefore the AO should not have presumed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TJ 374 (Ahd, 'A'Bench) Parikh Enterprise Pvt. Ltd ACIT 56 TTJ 529 (Ahd, 'A'Bench) CIT Vs Indian Explosive Ltd 192 ITR 144 (Cal) CIT Vs. Coimbatore State Transport P Ltd 61 ITR 480 Dee Cee Nylons Vs ACIT 97 Taxman 110 (Ahd, 'C'Bench) Gujarat Narmada Valley Fertilizers Co. Ltd Vs DCIT 73 TTJ 787 (ITAT Ahd. 'A' : Bench In view of the above facts of the appellant company and considering the legal decisions, it is submitted that disallowance made by the AO out of interest being unwarranted, deserves to be deleted." In further submissions on the issue, the Ld. AR submitted as under: 1. As regards interest disallowances, it is submitted that the rate of interest paid by the appellant was 12% as against 15% taken by the AO. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before the learned CIT(A). 6. We have heard both the parties and perused the records. We find that the AO has not shown any nexus between interest bearing funds and the amount advanced at a lesser rate of interest. Thus, basically the nexus itself is not established. Apart from that it is noticed that if day to day computation of interest in both accounts is done, disallowance would be of small amount of Rs.36,530/- only as against the disallowance made by the AO. It is however seen that the assessee's interest free funds itself are seen to cover the amount of these advances and therefore in absence of any nexus between interest bearing funds and funds provided at a lesser rate of interest, we do not find any infirmity in the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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