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TMI Blog2014 (12) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 1994-95 on 22.12.1994 and declared total loss of Rs. 1,40,070/. The same is processed under Section 143(1)(a) of the Income Tax Act and the Assessing Officer passed his order 27.03.1997. Against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Rajkot. The CIT(A) vide order dated 31.03.1998 partly allowed the appeal filed by the assessee. Being aggrieved by the said order, the assessee again filed an appeal before the ITAT. The Tribunal vide impugned order dated 16.06.2000 partly allowed the appeal. Hence, this appeal is filed at the instance of the revenue. 3. While admitting this appeal on 13.11.2000, the Court had formulated the following substantial questions of law: & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: "11. We have heard both the parties. It is pointed out by the ld. Counsel that the borrowed funds were utilized for business activities. For purchasing goods from various authorities as well as advancing for conducting procurement services rendered to GMMSS Ltd. resulted to earn net service charges of Rs. 4,04 Lakhs as well as sales to said company worth Rs. 157 Lakhs, where the assessee company earned gross profit of Rs. 17.99 Lakhs. There was expected business commitment agreed by GMMSS Ltd., which would have resulted in additional revenue of profit and on sale for about 1,000 M. tons of N.F. Metals, p.m. in coming days. Thus, this was an act on the part of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Rs. 4.04 Lakhs GMMSS Ltd. From the facts mentioned above, the assessee company could also earn 45% gross profit out of the sale made to GMMSS Ltd. Therefore, it cannot be said that the interest free advances were made without bueinss consideration. It is a fact that the funds have been borrowed by the assessee company. The only point for consideration of the A.O. is that whether the funds borrowed have been utilized for the purpose of business of the assessee or not. He has also to find out whether the transactions are genuine or not. Further, he has also to find out whether the funds have been advanced with the intention of evasion of tax. In the present case, it has been established that the transactions are genuine and they are also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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