TMI Blog2015 (10) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of filing of the return of income, therefore, no disallowance is called for u/s.36(1)(va) r.w.s. 2(24)(x) warranted - Decided in favour of assessee. Disallowance of claim proportionate interest on the belief that interest bearing funds were used for extending interest free loans and advances for other than business purpose - Held that:- Since in the instant case it is an admitted fact that no disallowance was made by the AO on account of such interest free advance to the above 4 parties, therefore, it will not be equitable on the part of the revenue to take a different stand now in respect of the amounts which were the subject matter of previous years’ assessment. We accordingly set aside the order of the CIT(A) and direct the AO to delete the disallowance made. See Commissioner Of Income-Tax Versus Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA High Court ] - Decided in favour of assessee. - ITA No.410/PN/2014 - - - Dated:- 4-9-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee by : Shri Kishor Phadke For The Department by : Shri Hitendra Ninave ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (va) to the total income of the assessee holding that provisions section 43B will not come into picture. 5. In appeal the Ld.CIT(A) distinguishing the various decisions cited before him upheld the action of the AO. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the assessee in the instant case has deposited the employees contribution to ESIC after the due dates as per provisions of the ESIC Act, the details of which are already given at Para 3 of this order. However, it is very clear from the above chart that the employees contribution to ESIC fund were made much prior to the due date of filing of the return of income. We find the issue stands covered in favour of the assessee by the decision of the Hon ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transport Ltd. reported in 368 ITR 749 wherein it has been held that the decision of the Supreme Court in Alom Extrusions Ltd. applies to employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It was explained that the company has adequate own funds. The total non-interest bearing own funds are to the tune of ₹ 87.16 crores. Relying on various decisions it was submitted that no disallowance is called for. The assessee further submitted that all the loans are strictly monitored by the lending bank and the loans cannot be diverted for any non-business purposes. It was further submitted that there are no non-business investments existing and there is no direct link between the borrowed funds against non-business investments. It was further argued that even if the advances are identified notionally for non-business purposes then the disallowance comes to ₹ 14,29,048/- only. However, in view of facts narrated above, no disallowance is called for. 10. However, the AO was not satisfied with the arguments advanced by the assessee. According to him the assessee does not have sufficient interest free funds to meet the interest free loans and advances. Further, there is also no business expediency for extending such loans. Distinguishing the decision of the Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. reported in 313 ITR 340 and holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the ledger account of Shri Rajesh Patel according to which an amount of ₹ 1 crore given on 24-07-2007 is continuing for the period from 01-04-2008 to 31-03-2009. He submitted that the same figure is continuing for the current assessment year. Referring to page 49 of the paper book he submitted that the amount of ₹ 20 lakhs given to Vishwa Bharti Academy on 18-04-2007 is continuing in A.Y. 2009-10 without any change. 15. Referring to the assessment orders for A.Yrs. 2007-08 to 2009- 10 passed u/s.143(3) he submitted that no disallowance of any such interest on this account has been made by the AO on account of advances given to the above 4 persons. Referring to the decision of the Hon ble Karnataka High Court in the case of CIT Vs. Sridev Enterprises reported in 192 ITR 165 he submitted that the Hon ble High Court in the said decision has held that consistency and definiteness of approach by the revenue is necessary in the matter of recognizing the nature of an account maintained by the assessee so that the basis of concluded assessment could not be ignored without actually reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and had been paying interest thereon. This interest was claimed as a deduction out of the assessee's income. Some of the partners of the assessee and the firm, N, were common and they had business links inter se. In these circumstances, the assessing authority disallowed the deduction claimed by the assessee to the extent of interest-free advances standing in the name of N on the ground that the amounts borrowed by the assessee were not utilised by the assessee for its own business but were diverted as advance to N free of interest. However, to the extent of advance shown as existing against N on the first day of the accounting year, which was the net balance of advances made during the previous accounting year, the same was excluded for the purpose of computing disallowance of deduction. The Tribunal held that since there were no disallowances in the past years when moneys had been advanced to N, the opening balances could not be considered in this year. In respect of advances made during the accounting year, the matter had to be remitted to find out whether they came out of borrowed funds or not and if it was shown to be out of funds not borrowed, then no disallowance cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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