TMI Blog2015 (10) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has also furnished the details of interest-free funds available with the assessee during the relevant period.A perusal of the same shows that a sum of ₹ 17 crores sanctioned as term loan was directly disbursed by the bank on behalf of the assessee to M/s. Sai Enterprises on different dates for purchase of land. Another sum of ₹ 2,54,00,000 was disbursed by the bank as term loan, that was utilised by the assessee for making payments to M/s. Soorya Developers (Rs.1,48,46,000) and M/s. Meghana Developers (Rs. 1,06,04,000) for development and construction of villas. The assessee has been able to explain utilisation of the entire secured loan of ₹ 20 crores for business purposes. The assessee has also given the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of ₹ 2,17,08,433 made under section 36(1)(iii) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The facts of the case as emanating from the records are : The assessee is a private limited company and is engaged in the business of real estate and construction. The assessee filed its return of income for the assessment year 2009-10 admitting loss of ₹ 34,12,997 and offered ₹ 3,77,879 as income under section 115JB of the Act. During the course of scrutiny assessment, the Assessing Officer made certain additions in the income returned by the assessee including disallowance of interest expenditure under section 36(1)(iii) of the Act. Aggrieved by the assessment order dated December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals). The learned authorised representative for the assessee submitted that the assessee had sufficient own funds. Therefore, there is no question of diversion of interest-bearing funds for advancing to group companies. The learned authorised representative further contended that the advances were given to sister concerns on account of commercial expediency. The Revenue has not been able to establish any nexus between the amount lent to sister concerns and interest-bearing funds. The loan amount was utilised for purchase of land and development and construction of project villas. The learned authorised representative prayed for dismissing the appeal of the Revenue. 5. We have heard the submissions made by the repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the bank as term loan, that was utilised by the assessee for making payments to M/s. Soorya Developers (Rs.1,48,46,000) and M/s. Meghana Developers (Rs. 1,06,04,000) for development and construction of villas. The assessee has been able to explain utilisation of the entire secured loan of ₹ 20 crores for business purposes. The assessee has also given the details of interest-free funds, amounting to ₹ 82.47 crores. The details of interest-free funds and utilisation of the entire borrowed funds for business of the assessee have not been controverted by the Revenue. 7. As far as, the argument of the Revenue with respect to utilisation of own funds for the repayment of loan instead of advancing to group companies is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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