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2015 (10) TMI 2496 - ITAT PUNE

2015 (10) TMI 2496 - ITAT PUNE - TMI - Disallowance of interest for allegedly advancing interest bearing fund towards interest free advances - Held that:- Undisputedly, the assessee has advanced ₹ 75,00,000/- in the month of August. The advance received by the assessee on account of transfer of rights in land is more than sufficient to fund the advances made by the assessee to Shri N.V. Jadhav during that period.

Thus, in view of the fact that the assessee was having sufficient .....

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the Respondent: Shri Dheeraj Kumar Jain ORDER PER VIKAS AWASTHY, JM : The appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-II, Pune dated 25-08-2011 for the assessment year 2007-08. 2. The appeal has been filed with a delay of 298 days. The assessee has filed an application for condonation of delay. The application is supported by an affidavit citing reasons for delay. After perusal of same, we are satisfi .....

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The case of the assessee was selected for scrutiny and accordingly, notice u/s. 143(2) was issued to the assessee on 29-08-2008. During the course of scrutiny assessment, the Assessing Officer inter alia made disallowance of interest ₹ 6,56,250/- on account of diverting interest bearing fund for non-business purpose without charging any interest. Aggrieved by the assessment order dated 10-12-2009, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). .....

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ate of advance. The assessee had transferred the rights in the land and had received ₹ 1,51,00,000/- as advanced. This fact has not been disputed by the Assessing Officer. The assessee had advanced ₹ 75,00,000/- to Shri N.V. Jadhav from the amount received from the transfer of rights in the land. Thus, the authorities below have erred in making disallowance of ₹ 6,56,250/- by alleging that interest bearing funds have been utilized for giving interest free advances. I .....

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e of advancing interest free loan in the month of August, the cash flow statement shows that the assessee was not having own funds to the extent of interest free loan advanced. The ld. DR further submitted that the assessee has not been able to show any commercial expediency for advancing interest free loan out of interest bearing funds. Hence, the disallowance of interest has been rightly made by the authorities below. To support of his submissions, the ld. DR placed reliance on the decision of .....

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dhav, who is engaged in the construction of roads. The contention of the assessee is that the loan has been advanced by the assessee from own funds and not interest bearing funds, whereas according to the Department the assessee has given advance to Shri N.V. Jadhav out of interest bearing funds. 7. The Assessing Officer in his order has categorically stated that the amount has been advanced by the assessee in the month of August. According to the Assessing Officer an exami .....

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