TMI Blog2015 (12) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ed cheques from cash credit account on different dates. His investment in Fixed Assets is ₹ 78,41,751/-, in Fixed Deposits ₹ 9,98,156/-, in current assets ₹ 1,19,08,899 and in loans and Advance is ₹ 36,86,860/-. From the above, it is clear that the assessee had no surplus funds which could be advanced as interest free loan. It appears that loan has been given to Adityam Polymer (P) Ltd., Roorki for the purpose of purchasing land out of loan fund. The assessee could not be able to substantiate his stand that he had surplus fund which could be advanced as interest free loan to the sister concern so as to make the assessee eligible for deduction of interest. The case laws cited by the assessee, actually deal with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 5,05,692/- in the Profit and Loss account. The assessee has advanced a interest free loan of ₹ 24,86,550/- to Adityam Technoplast Pvt. Ltd. in the following manner : Date Amount (Rs.) a). 10th April, 2006 6,60,000 b). 27th May, 2006 9,15,000 c). 27th May, 2006 7,37,500 d). 30th May 2006 1,74,050 24,86,550 3. The said loan was for purchase of plot at Roorki by the said company and the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard is that if the advances are made out of own funds which are non-interest bearing and the interest bearing funds are used in the business only, then no disallowance of interest can be made. Out of total loan amount of ₹ 24,86,550/- advanced to Aditya Polymers Pvt. Ltd., as reproduced above, a sum of ₹ 6,60,000/- was advanced out of ₹ 3,50,000/- deposited in case on 10.04.06 out of own fund and ₹ 2,25,000/- taken as unsecured loan on 12.04.2006 @ 8% interest. A sum of ₹ 9,15,000/- and ₹ 7,37,500/- was advanced out of deposit of ₹ 17 lacs on 27th May, 2006, which was transferred from current account no. 2784 with ICICI Bank, containing the payments received against invoices from debtors. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan advanced to M/s. Adityam Technoplast (P) Ltd. He further submitted that interest on borrowed money is allowed as a deduction from the business only if the assessee satisfies the condition laid down in section 36(1)(iii) of the Act only if the same has been used for the purpose of business. Where the money borrowed was diverted for giving interest free loans to sister concern, the proportionate interest attributable to such loans could be legitimately disallowed by the AO. He also relied on the following judgments : (i). S.A. Builders Ltd. vs. CIT [2004] 26 ITR 535 (P H) (ii). CIT vs. H.R. Sugar Factor Pvt. Ltd., 187 ITR 363 (All). (iii). Indian Shavings Products Ltd. v. CIT (2004) 265 ITR 250 (Raj). (iv). Caldern Pharmaceut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be able to substantiate his stand that he had surplus fund which could be advanced as interest free loan to the sister concern so as to make the assessee eligible for deduction of interest. The case laws cited by the assessee, actually deal with the cases where there was surplus fund on account of huge profit or huge reserve or interest free fund. Hence, the same are not applicable to the present case in hand. We, therefore, do not find any good reason or material on record to interfere with the conclusions arrived at by the learned authorities below. The appeal of the assessee, therefore, being devoid of merits, is liable to be dismissed. 8. In the result, the appeal of the assessee is dismissed. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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