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2016 (1) TMI 896 - ITAT AHMEDABAD

2016 (1) TMI 896 - ITAT AHMEDABAD - TMI - Disallowance of interest payment - CIT(A) deleted the addition - whether the assessee failed to discharge the onus cast on him to prove the genuineness that the interest payment was not diversion of interest bearing funds to non interest bearing loans and advances - Held that:- The only question raised by A.O. in his assessment order is reasons for not charging interest under loans and advances shown in the balance sheet at ₹ 2,02,81,372/- and the .....

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te business and only a sum of ₹ 27,20,000/- was given as interest free loans and advances. The assessee has agreed for addition on interest of ₹ 1,30,254/- on the fresh loans of ₹ 27lacs given to M/s. Akshar Info Service (P) Ltd. calculated on the basis of days for which loans were given. Further, after reducing ₹ 1,18,70,000/- on the total loan advance of ₹ 2,06,81,372/-, the remaining amount comes to ₹ 88,11,372/- and out of this remaining amount of ₹ .....

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Dipak Sutaria, Sr. D.R. For The Assessee : Shri Mahesh Chhajed, C.A. ORDER PER :Manish Borad, Accountant Member This appeal of the Revenue is directed against the order of CIT(A)-II, Surat, dated 12.04.2012. Assessment for the year 2009-10 was framed on 12.12.2011 by ITO, Ward-3(2), Surat. 2. Revenue has raised following grounds of appeal: [1] On the facts and circumstance of the case and in law, the Ld. CIT(A)-II, Surat has erred in deleting the addition of ₹ 18,51,175/- made on account o .....

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ring total income at ₹ 2,24,688/-. Assessee scase was selected for scrutiny and assessment proceedings were carried out by Assessing Officer for framing the assessment u/s.143(3) of the IT Act (hereinafter referred as the Act ). During course of assessment proceedings, Assessing Officer noticed that in the balance sheet of the assessee loans and advances stood given at ₹ 2,06,81,372/- as on 31.03.2009. Assessing Officer asked the assessee to furnish item wise copies of loans and adva .....

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in p&l account under the head finance charges . 4. Aggrieved assessee went in appeal before the CIT(A) who deleted the addition made by the Assessing Officer by giving following observations: 5. I have considered the facts of the case, basis of addition made by AO and submission of appellant. As it is clear from the explanation of the appellant and copies of documents submitted during the appellate proceedings, AO failed to consider the relevant facts of the case explained by appellant duri .....

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balance of ₹ 55,61,278/-in his bank. Similarly, in the case of ChampaklalSopariwala, it has been submitted that for giving advance of Rs,50,00,000/- on 03.12.2008, appellant had received ₹ 75,00,000/- from sale of shares on the same date. In the same way, in other cases also, as reproduced in submissions, appellant has established that he was having sufficient interest free funds for giving interest free loans and advances to different parties.The claim of appellant is supported by .....

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years i.e. 2007-08 and 2008-09, appellant's case was scrutinized on same facts but no such disallowance made. The Xerox copies of assessment orders filed during the appellate proceedings confirm this fact. 5.2 In view of above discussion, it is held that there is no merit in disallowance made by Assessing Officer, hence, addition is deleted. However, the appellant himself had agreed for addition of ₹ 3,50,473/- as per order sheet entry dated 02.12.2011 and this fact has been submitted .....

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letters submitted before the Assessing Officer during the time of assessment proceedings which were not adjudicated on merits. 5.1 Ld. A.R. also submitted that the total loans and advances which were stood given as on 31.03.2009 at ₹ 2,06,81,372/- were not new loans given during the year. Out of ₹ 2,06,81,372/-, fresh loans and advances given during the year was ₹ 1,18,70,000/- and ₹ 88,11,372/- were old loans which have been brought forward from previous year. Out of th .....

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sh loans given during the year under appeal at ₹ 1,18,70,000/-, loans and advances to the tune of ₹ 91,50,000/- were given for business purposes relating to Real Estate Project of the assesseein the name of M/s. BhaktiDharm Developers. Ld. A.R. also referred to the audited balance sheet of the assessee wherein he has shown interest payment of ₹ 18,51,175/- which included interest paid to bank at ₹ 4,81,311/- and ₹ 13,69,864/- to various lenders on unsecured loan. Du .....

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al on record. From perusal of the assessment order it is revealed that the AO has made addition of ₹ 18,51,175/- wherein he has not considered the deemed interest income at ₹ 3,58,473/- agreed by the assessee to have earned on interest free loans and advances. Had this deemed interest income been considered by the AO then the addition would have been scaled down from ₹ 18,51,175/- to ₹ 14,92,702/-. Further during the appellate proceedings before the CIT(A), he has also me .....

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djudicated is that whether the assessee has utilized the available funds subject to interest against the interest free loans and advances. Looking to the audited financial statement, it reflects that assessee has debit capital balance of ₹ 5,93,01,244/- which the ld. D.R. has referred to support that assessee was having no interest free funds. This debit capital balance of the assessee is on account of brought forward business losses as well as loss incurred during the year under appeal an .....

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