TMI Blog2011 (6) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... edit and other loans raised forbs amounting ₹ 1,91,815/- being interest not charged on advances of ₹ 19,08,610/- u/s 36(1)(iii) of the Income Tax Act. 2. That authorities below has erred in law and facts in applying the proviso to s.36(i)(iii) without appreciating that no loan was raised for purchase of plot. 3. The brief facts of the case are that the assessee is engaged in the business of export of scientific and educational goods. The assessee is carrying on the business as sole proprietor under the name and style of M/s J.S.Exports. During the course of assessment proceedings, the AO noted the assessee to have declared the loans and advances to the tune of ₹ 2062970/-. It included chit-fund advance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is under para 4.3 at pages 17 and 18 of the appellate order. The CIT(A) vide para 4.4 rejected the plea of the assessee both in connection with the advance for plot of land and the other advances and upheld the disallowance made by the AO u/s 36(1)(iii) of the Act. The assessee is in appeal against the aforesaid order of the CIT(A). 4. The Ld. AR for the assessee drew our attention to the balance sheet and other schedules placed at pages 5-9 of the Paper Book. It was pointed out by the ld. AR that the list of loans and advances as per schedule 10 to the balance sheet is annexed at page 9 of the Paper Book. It was further pointed out that as evident from the capital account of the assessee placed at page 7 of the Paper Book, the open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Monga ₹ 2,00,000/- iv) Advance to Jainsons Sons ₹ 2,57,699/- 7. The submission of the assessee in respect of the advance for purchase of plot was that the said plot was purchased for factory and as no construction had taken place, the same was not put to use. However, the investment in the said plot was made for establishing manufacturing unit in future. The assessee had taken no loan directly for the purchase of the said plot of land. The loan to Shri Bhushan Kumar and Dr.Tarsem Monga were claimed to have been made by the assessee, which were received back in the succeeding year. The reason for making the aforesaid advances was again for the purchase of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn is to be utilized for the establishment of manufacturing unit, interest paid on secured loans not attributable to the aforesaid investment made in the purchase of plot of land, cannot be disallowed. The principles laid down by the Hon'ble Punjab Haryana High Court in Abhishek Industries Ltd.(supra) are not applicable to the facts of the present case before us where the investment is made for the purchase of plot of land for setting up manufacturing unit and hence tests of commercial expediency satisfied. It is not the case of the Revenue that the said plot of land is residential in nature. Further, we find merit in the alternate plea of the assessee that this being the case of sole proprietor, the capital account outstanding in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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