TMI Blog2019 (1) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of ₹ 60.61 crore has been given to the related party in the current year. The appellant has explained that share capital and free reserves & surplus amounting to ₹ 109.19 crore were available as on 31/03/2012 and therefore, the question of transfer of interest bearing funds does not arise. We find that the decision of the Ld. CIT(A) is based on the relevant facts pertaining to the financial position of the assessee after duly analyzing the availability of own funds and taking into consideration the orders of the Tribunal, judgments of the jurisdictional High Court. Interfering or altering in the well reasoned order of the Ld. CIT(A) would only disturb the settled position of law in force and hence the order of the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see on the grounds that the assessee is paying interest on the bank loans, unsecured loans and at the same time extending interest free loans to the related concerns to the tune of ₹ 60.61 Crores. 4. Before the Ld. CIT(A) the assessee submitted as under: i. Amount given to Penex Polyfab Pvt Ltd in subject period of ₹ 60,61,00,000 is out of fresh share capital raised during the year from M/s Genex Fincap Pvt Ltd which is much more than aforesaid amount same is not out of interest bearing funds; ii. Interest claimed is on term loan sanctioned for specific purpose and cannot be correlated to amount advanced to aforesaid concern; iii. Supreme Court in Hero Cycles 379 ITR 345 has overruled P H High Court decision in Abh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 50,17,75,596.00 Total ₹ 7,18,09,666.87 The Assessing Officer has disallowed this expenditure in toto. vii. The bare perusal of the balance sheet would also show that there has been an increase in the share capital of the company by ₹ 50 lakhs and share premium of ₹ 82.50 Crores. The total amount raised during the Financial Year is ₹ 83 Crores. viii. The details of the share capital, share premium and the advances given is as under: Share Capital Raised 50,00,000 Add: Share Premium 82,50,00,000 Total 83,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seen from the order that AO has placed reliance on the judgement of honourable Punjab and Haryana High Court given in the case of Abhishek Industries. Accordingly, it was held that interest-bearing funds have been diverted and have not been used for business purposes and therefore, interest expenditure cannot be allowed under section 36(l)(iii) of the IT act. 4.3 The appellant has submitted that AO was not justified in making a disallowance on account of interest expenses claimed as the appellant was never given an opportunity to explain this issue. It is submitted that AO has never raised this issue in the course of assessment proceedings and therefore disallowance made on this account is not justified. The appellant has also placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO. It is submitted that this amount consists of ₹ 2.09 crore of bank charges also, which could not have been disallowed by the AO. It is stated that AO was not justified in making the disallowance without establishing any linkage as to how these funds were diverted. 4.6 The appellant has submitted that sufficient interest free funds were available . business and advances have been given to Genex Polyfab Private Limited out of these funds. The appellant has also placed reliance on the judgement of Honourable Punjab and Haryana High Court in the case of Max India Ltd 398 ITR 209, in the case of Kapsons 381 ITR 204 and also in the case of Bright Enterprises 381 ITR 107. 4.7 I have carefully considered the material avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot justified in making a disallowance of interest claimed under section 36(l)(iii) of the IT Act. Accordingly, AO is being directed to delete the addition of ₹ 7,18,09,666 made under/this head. 7. We find that the decision of the Ld. CIT(A) is based on the relevant facts pertaining to the financial position of the assessee after duly analyzing the availability of own funds and taking into consideration the orders of the Tribunal, judgments of the jurisdictional High Court. Interfering or altering in the well reasoned order of the Ld. CIT(A) would only disturb the settled position of law in force and hence the order of the Ld. CIT(A) is hereby confirmed. 8. As a result, appeal of the Revenue is dismissed. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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