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TMI Blog2014 (7) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cylinder. Assessee filed its revised return of income for A.Y. 07-08 on 11.08.2008 declaring total income of Rs. 1,12,93,900/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 18.12.2009 and the total income was determined at Rs. 1,25,19,317/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 16.12.2010 granted partial relief to the Assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and Assessee has also filed a C.O. The grounds raised by the Revenue reads as under:- 1.1 The Learned CIT(A)-VIII, Ahmedabad has erred in law and on facts in deleting the addition of Rs,12,25,417/- made by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome on money advanced at 10% was Rs. 11,65,959/-. He accordingly considered 3.5% of the interest expenses amounting to Rs. 12,25,417/- as being for non business purposes and disallowed the same. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under:- 4.1 . On the other hand, the Ld. A.R submitted before me that during the course of assessment proceedings, the appellant company vide its submission dated 14/12/2009 filed the complete details of advances given for purchase of land along with Xerox copy of Banakhat executed and source of advances to the A.O. However, the A.O. has not verified and considered the source of advances submitted before him which is against the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven for purchase of land and bank borrowings. The disallowance made by the learned A.O. on account of interest paid to bank is not at all sustainable because the appellant company has not borrowed any amount towards advance given for purchase of land. 4.2 It is observed from the assessment order that A.O failed to establish any nexus between interest bearing loans and advances given for purchase of land. The addition made by A.O appear to be on hypothetical basis, and do not have any legal foundation. The appellant has categorically established before A.O with facts and figures that no investment in land has been made out of interest bearing funds. 4.3 ...................... 4.4 4.4 In view of the details discussed held above and partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e funds available both interest free and over drafts and/or loans taken, then a presumption would arise that the investments would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments. Before us, ld. A.R. has submitted that the land was purchased out of the amount that was advance to A.D Gravures in earlier years. It is also seen that the Assessee had charged interest from A.D. Gravures and the interest was assessed as business income. The aforesaid submissions have not been controverted by Revenue placing any tangible material on record. We further find that the ld. CIT(A) after relying on the various decision cited in his order has deleted the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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