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TMI Blog2018 (11) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the Tribunal is right in law in interfering both with substantive and protective additions? 2. Whether, on the facts and in the circumstances of the case-, (a) The ITAT is right in allowing the interest paid on deposits which were not taken for the purpose of business of the assessee, as a deduction u/s.37(1)? (b) the Tribunal is right in law and fact in interfering with the addition made on protective basis without considering the issue on merits? (c) should not the ITAT have directed the CIT(A) to consider the protective addition on merits in view of the reversal of the order of CIT(A), on the substantive addition? 3. Whether, on the facts and in the circumstances of the case-, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister concerns is a mere camouflage. On that basis, the assessees were found to have earned interest income far in excess of that received by it from the partners. To compute such interest income received, the AO resorted to Sections 144 and 145 of the IT Act. The AO, on enquiry, found the interest received by comparable financial institutions and computed the income accrued in the hands of the assessee-firms at the average of 20%. This addition was made to the income and there was a dis-allowance of the expenditure claimed by way of interest payment to the public who had deposited amounts with the assessee-firms. The dis-allowance was on the count that there was no business of finance carried on by the assessee. 4. The first appellate aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest earned based on the investment made, but on different grounds. A camouflage or not, the assessee had arranged the affairs in such a manner as no interest being earned directly by the assessee firms through the investments made by its partners. The assessee had accepted deposits from the public and also made advances to its partners. In any event, the partners were entitled to take advances from the firm on payment of interest, which cannot be taken to be a business carried on by the assessee-firms. We do not agree with the Tribunal to that extent. 7. The investment made by the partners in the sister concerns and the income derived by way of more interest, than that they were paying to the assessee-firms could be assessed at the han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.I.T. [(1979) 118 ITR 200] . Therein the assessee carried on business in money lending and had various sources of income from shares, properties etc. It promised to donate Rs. 10 lakhs to set up an engineering college. The assessee also debited its capital account and corresponding credit was given to the account of the college. It then availed of an overdraft facility of Rs. 5.5 lakhs from an account maintained for business purposes and disbursed it to the college. The balance was treated as a loan availed by the assessee from the College. The assessee paid interest to the bank on the overdraft and to the college for the loan, which were claimed as business expenditure. The overdraft facility was held to be not availed for business purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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