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TMI Blog2017 (3) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the Income Tax Appellate Tribunal was justified in law in dismissing the appeal filed by the Revenue holding that loan given to M/s Calcutta Detergents Ltd. was a trade advance and that the Assessing Officer had not been able to establish that there was a direct nexus between borrowed funds and the advance given, ignoring the vital facts that as on 31.03.2005 the assessee was not having any interest free fund at its disposal as the whole of the share capital and Reserves & Surplus was locked up in Assets and Business of the assessee and as on 31.3.2006 it was having surplus of Reserve of Rs. 6,48,06,156/- only, while the amount advanced was at Rs. 18,34,64,267/-. This clearly established that the interest bearing fund were advanced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary, the assessee's case was that M/s Calcutta Detergent Pvt. Ltd. was engaged in the activity of manufacturing branded detergent exclusively for the assessee. In view of the same the assessee claimed existence of commercial expediency for making advance to M/s Calcutta Detergent Pvt. Ltd. Being aggrieved by the assessment order the assessee carried it before the CIT (Appeals), who by his order dated 21.05.2009 allowed the appeal of the assessee after accepting the contention with regard to the existence of commercial expediency for making advances. For ready reference the findings recorded by CIT (Appeals) in paragraph no.6 of its order are quoted hereunder:- "I have considered the facts and circumstances of the case as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isproportionate for the sale of goods of M/s Calcutta Detergent Pvt. Ltd. He submits that the disallowance was correctly made. We are unable to accept the contention of Sri Mahajan for the reason that the issue of commercial expediency had been established and accepted by both the appellate authorities. No further test is possible to be applied to determine whether the amount of advance given is proportionate to the commercial expediency that had been established by the assessee especially when the Tribunal has further recorded that assessee had recorded sales of Rs. 7 crore this year and Rs. 44 crore next year. In this regard the Hon'ble Apex Court in the case of S.A. Builders Ltd. v. Commissioner of Income Tax (Appeals) and another ..... X X X X Extracts X X X X X X X X Extracts X X X X
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