TMI Blog2019 (3) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter, due to supply chain issues with M/s Essar Steel, the assessee was given to understand that discount further shall not be given by M/s Dashmesh Steel Hypermart, as such purchases were stopped. Further that a part of advance was returned back aggregating to ₹ 1.22 Crores. In this regard the in the case of Reliance Utilities & Power Pvt. Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that the disallowance out of interest expenditure is not called for when the assessee has got sufficient own funds. Where the assessee has own funds as well as borrowed funds, a presumption can be made that advances given for non business purposes have been made out of own funds. A similar view has been held by the Hon’ble Supreme Court in Munja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business exigencies and that the appellant is not in the business of money lending, which is contrary to facts and law. 2. The Ld. CIT(A) missed to note that the funds advanced was not given from cash credit account and that the funds are own funds of the appellant. 3. The notional interest disallowed by Ld. CIT(A) was true and legitimate 4. That the impugned order is bad in law and not in consonance with facts, and against the principles of natural justice. 5. Besides the above grounds the appellant craves leave to add, alter, amend, and / or to modify any grounds of appeal, if necessary. 2. The brief facts of the case are that assessee filed return of income on 27.9.2010 declaring total income at ₹ 6,08,991/- in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasons for re-opening the case. The same was provided to the assessee vide letter dated 10/05/2016. Thereafter, notice u/s 143(2) of the Act was issued on 16/12/2016 and Notice u/s 142(1) was issued to the assessee on 04/08/2016. In response to the same, the assessee attended the case on 06/12/2016. The case has been discussed in details with respect to disallowance of proportionate interest. The assessee orally explains that the assessee-firm had sufficient capital in its books. Out of which the advance was given to the said firm. However, the assessee-firm could not furnish any documentary evidence in support of its claim. Again, a notice u/s 142(1) of the Act dated 15/12/2016 requiring it to explain as to why proportionate interest ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of written submission dated 03.1.2018 and copy of financial statements. 4. On the other hand, Ld. DR relied upon the orders of the authorities below and stated that they have passed well reasoned orders, which do not need any interference and needs to be upheld. 5. I have heard both the parties and perused the records especially the impugned order and the rival submissions, I note that the sole issue involved in this appeal is relating to disallowance of notional interest by the AO of ₹ 19,95,638/- on interest free advance given by the Assessee to its sister concern M/s Dashmesh Steel Hypermart during the relevant period. It is further noted that the funds advances to M/s Dashmesh Steel Hypermart were out of the capital with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 298(SC). Therefore, considering the above decisions, the contention of the Assessee that no disallowance of interest was called for as it had non-interest bearing funds available in its capital account was not found to be justified by the Ld. CIT(A). However as pointed out by the AO, the Assessee had only funds to the extent of ₹ 1,02,54,062/- as on 31/03/2QJ0 in the partner s Capital account, therefore only to this extent it can be considered that non-interest bearing funds were available, accordingly on balance funds (Rs 3,43,00,000/- less ₹ 1,02,54,062/-) the disallowance of interest was valid. Therefore, the AO was rightly directed to recompute the disallowance of interest by the Ld. CIT(A), which does not need any interfer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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