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TMI Blog2018 (12) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... romoter and Developer. A survey action was undertaken u/s.133A of the Acton 17-03-2010, in which the assessee offered a sum of Rs. 1.00 crore as income over and above the regular income. However, return was filed declaring total income of Rs. 61,09,336/-. On being called upon to explain as to why the income offered during the course of survey was not declared, the assessee submitted some details of projects undertaken and extent of completion. In this hue, it was submitted that the statement made at the time of survey for completion of projects at 90%, constituting foundation for the surrender of Rs. 1.00 crore, was not correct. The Assessing Officer (AO) called upon the assessee to give the figures of opening and closing work in progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 3 and 4 are against the confirmation of addition of Rs. 10,50,000/- on account of rental income and disallowance of proportionate depreciation allowance and insurance expenses. 6. The facts concerning this issue are that the survey transpired about the assessee's business premises being occupied by other sister concerns as well. Rental income shown for the preceding year was Rs. 13.75 lakhs. The assessee did not offer any rental income for the year under consideration despite the director of the assessee admitting in the statement recorded at the time of survey that rent of Rs. 1,25,000/- per month was received from M/s Phinix Shelter Pvt. Ltd. The AO added the income under the head `Income from house property' at Rs. 10,50,000/- after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an admitted position that the assessee was using only 30% of the premises, it is but natural that the disallowance in respect of depreciation and other expenses to the extent of 70%, being, relatable to the part not used by the assessee exclusively for its business purposes, cannot be faulted with. We, therefore, approve the view taken by the ld. CIT(A) on this issue. These three grounds are ergo dismissed. 9. The only other ground is against the confirmation of addition of Rs. 2,80,944/- towards interest. The AO found the assessee to have received/advanced certain loans from/to its sister concerns. An amount of Rs. 26,01,333/- was excess of loans advanced over the loans received from the sister concerns. The AO observed that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of business or profession. If, however, an assessee is having its own interest free surplus funds and such funds are utilised as interest free advances even for a non-business purpose, there cannot be any disallowance of interest paid on interest bearing loans. The Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom), has held that where an assessee possessed sufficient interest free funds of its own which were generated in the course of relevant financial year, apart from substantial shareholders' funds, presumption stands established that the investments in sister concerns were made by the assessee out of interest free funds and, therefore, no part of interest on borrowings can be disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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