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Deputy Commissioner of Income Tax, Central Circle-2 (1) , Pune Versus A2Z Online Services Pvt. Ltd.,

2015 (5) TMI 1040 - ITAT PUNE

Addition on account of interest attributable to interest free loans given - Held that:- Respectfully following the decision of the Tribunal in assessee’s own case in the immediately preceding assessment year, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the Assessing Officer wherein held that interest free loan is out of the excess funds only. Such a claim of deduction cannot be disallowed, unless it has been shown that the assessee has actually diverted its .....

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his appeal filed by the Revenue is directed against the order dated 20-05-2013 of the CIT (A) Central, Pune relating to Assessment Year 2007-08. 2. The revenue in its only ground has challenged the order of the CIT(A) in deleting the addition of ₹ 27,90,697/- made by the Assessing Officer on account of interest attributable to interest free loans given. 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of services relating to a .....

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well as interest free. He further noted that the rate of interest varies from 6.5% to 30%. He, therefore, asked the assessee to explain as to why interest attributable to interest free loans should not be disallowed. It was argued by the assessee that no interest can be disallowed as the interest is paid for business purpose. Further, there is no nexus between the interest bearing funds and interest free advances given and hence no interest can be disallowed. It was argued .....

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ng Officer to give a detailed working of interest attributable to interest free advances, the assessee filed without prejudice a detailed workings based on products method as per the working for the immediately preceding assessment year. As per such working filed by the assessee the interest attributable to interest free loans and advances out of interest bearing loans amounted to ₹ 27,90,697/-. The Assessing Officer accordingly made addition of ₹ 27,90,697/- being interest attributa .....

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been decided by the CIT(A) in the preceding assessment year. 6. Based on the arguments advanced by the assessee and following the decision of the CIT(A) in assessee s own case in the immediately preceding assessment year the CIT(A) deleted the disallowance made by the Assessing Officer. 7. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 8. The Ld.counsel for the assessee at the outset filed a copy of the order of the Tribunal in asses .....

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After hearing both the sides, we find the Mumbai Bench of the Tribunal in assessee s own case vide ITA No.4955/Mum/2009 order dated 30-04-2014 for A.Y. 2006-07 has decided the issue in favour of the assessee and the appeal filed by the Revenue has been dismissed by observing as under : 8. We have carefully considered the rival contentions and perused the material available on record. The main dispute is disallowance of interest on the ground that the assessee has given interest free l .....

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nds have also been noted by the learned Commissioner (Appeals) which has been incorporated above in the forgoing paragraph. Based on these availability of funds, the learned Commissioner (Appeals) has held that interest free loan is out of these funds only. Such a finding of the learned Commissioner (Appeals) appears to be prima-facie correct. From the details, which has been submitted, it is seen that during the month of April 2005 itself, the assessee has received huge interest free loans whic .....

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