TMI Blog2019 (2) TMI 1704X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/- advance given to Reliable Infra Ltd ₹ 9,37232/-for business purpose. CIT(A) has accepted the contentions of the assessee that the interest free advances on which disallowance of interest is to be made are to the tune of ₹ 1,22,,92,377/-. We find merit in the arguments of assessee that own funds were ₹ 1,58,40,305/- as the balance Sheet whereas the interest free advances are only ₹ 1,22,92,377/- and therefore presumption is that no disallowance u/s 36(1)(iii) of the Act can be made as the interest free funds were more than the amount of advances given free of interest which is supported by the decision of the Hon ble Bombay High Court in the case of CIT Vs Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were diverted for giving loans and advances on which no interest was charged. The AO calculated the disallowance by applying rate @ 14% to the amount of loans and advances which worked out to ₹ 27,70,713/- and added the same to the income of the assessee u/s 36(!)(iii) of the Act. 4. In the appellate proceedings, the ld CIT(A), after taking into account the contentions of the assessee partly allowed the appeal of the assessee by partly sustaining the addition to the tune of ₹ 17,58,421 by observing and holding as under:- 5.5. It is noted that loans to directors and associates of ₹ 132,29,609/-and other loans and advances of ₹ 33,55,861/- is given totaling to ₹ 165,85,4707- - The oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is partly allowed. 5. We have heard the rival contentions and carefully perused the materials on records including the details of own funds and details of advances. We find that the ld CIT(A) has recorded findings of facts that loans and advances to directors were ₹ 1,32,29,609/-, advances for business purposes were ₹ 33,55,861/- such as advances to suppliers, for factory plot and advances to staff and the remaining amount of advances represented the advances to various govt. authorities. The ld CIT(A) has recorded a finding of facts to this effect and sustained the additions on ₹ 1,22,92,377/- @14% by excluding out the advances to directors of ₹ 1,32,29,609/- advance given to Reliable Infra Ltd ₹ 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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