TMI Blog2020 (3) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact is not rebutted by the revenue, therefore, assessing officer is hereby directed to delete the addition. - Decided in favour of assessee. - ITA No.752/Ind/2019 - - - Dated:- 6-3-2020 - Shri Kul Bharat, Judicial Member For the Appellant : Shri S.N. Agrawal Pankaj Mogra, ARs For the Respondent : Shri R.P. Mourya, Sr. DR ORDER This appeal by the assessee is directed against order of the CIT(A)-II, Indore dated 07.01.2019 pertaining to the assessment year 2009-10. The assessee has raised following grounds of appeal: That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in maintaining the addition of ₹ 553024/- made by the Ld.AO out of interest Expenses in the set aside proceedings without properly appreciating the facts of the case and submissions made before him. The addition so made in wrong and uncalled for. The same requires to be deleted. 2. The assessee reserve its right to add alter and modify the ground of appeal 2. The only effective ground is against sustaining the addition of ₹ 5,53,024/- made by the assessing officer out of interest expenses. This is second round of litigation, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Interest Charged on Interest Free Loans 5,53,024 02. Disallowance out of Depreciation 2,09,409 Total 7,62,433 C] That against the said additions made by the A.O. in the original Assessment order , the assessee had preferred an appeal before the Ld. CIT (A). The Ld. CIT(A) vide his order dt 20.09.2013 has dismissed the appeal as filed by the assesse maintained the entire amount of addition of ₹ 7,62,433 as made by the Ld. A.O. D]. The Assessee had preferred an appeal before the Hon ble ITAT against the said order passed by the Ld. CIT (A). That Hon ble ITAT vide his order dt. 10.02.2016 has set aside the issue regarding disallowance of Interest paid of ₹ 5,53,024/- to the file of A.O. and has upheld the issue regarding disallowance of Depreciation of ₹ 2,09,409/-. The direction as given by the Hon ble ITAT in Para 7 on inner Page No 5 is reproduced here under:- E]. That in pursuance to the directions of the Hon ble ITAT, the Ld. A.O. has passed an order u/s 143(3)/254 dt. 22.12.2017 wherein he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,01,40,186/- and ₹ 13,86,25,960/- totaling to ₹ 23,87,66,146/-. S. No. Particulars Amount [Rs] 1 Capital 10,01,40,186 2 Current Liabilities 13,86,25,960 Total 23,87,66,146 1.5.1 ] The loan as taken by the assessee in form of secured and unsecured is as under: S. No. Particulars Amount [Rs] 1 Secured loan Cash credit loan 14,31,17,185 2 Unsecured loan 6,90,40,485 21,21,57,670 1.5.2] The loan as taken by the assessee utilized for the purpose of her business, detail of the same is as under:- S. No Nature of Amount [Rs] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcomber s case (supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the overdraft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of ₹ 5.75 crores to aforesaid above parties on which no interest was charged or less interest was charged. Thus interest-free advance were given out of interest-free funds available with the assessee during the year for which sufficient interest-free funds were available. Therefore, we are of the view that the Ld. A.O. has failed to establish that interest free advances to above stated four parties were out of interest bearing funds. We find that the AO has not been able to establish the nexus between interest bearing funds utilized for non business purpose as held in above quoted decision of Hon`ble Supreme Court. The ld. A. R. has placed reliance in thecase of CIT vs. Reliance Utilities Power Ltd. (2009) 313 ITR 340 (Bom)/ 178 Taxman 135 (Bom) wherein it was held that if there was funds available both, interest-free and overdraft and or/loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest free funds were sufficient to meet the investments. In the present case, the sufficient interest free funds were available at the disposal of the assessee. Therefore, presumption w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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