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TMI Blog2020 (4) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the disallowance of interest of Rs. 3,14,075/- u/s. 36(l)(iii) of the Income Tax Act 1961. ii) On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred confirming the disallowance on the ground that the Assessing Officer was justified in holding that the appellant had no interest free funds out of which the appellant could give interest free loans of Rs. 25,46,000/-. iii) On the facts and in the circumstances of. the case and in law, the learned C.I.T.(A) erred in confirming the findings of the Assessing Officer that the appellant failed to prove that it had interest free fund of Rs. 2,10,76,888/-and hence the interest of Rs. 3,14,075/- is allowable u/s. 36(l)(iii). iv) The appellant craves, leav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t free funds for extending advances to the following parties :- i) Virendra Sutaria Rs. 16,36,000 ii) Virendra Sutaria (HUF) Rs. 5,00,000 iii) Pratibha Sutaria Rs. 2,50,000 iv) Rajan Gupta Rs. 1,60,000 Assessing Officer observed that the above funds were claimed to be business advances. However, the assessee failed to furnish any evidence in this regard. 6. Assessing Officer rejected the assessee's submission that sundry creditor for goods amounting to Rs. 2,05,06,270/- and sundry creditors for expenses of Rs. 5,20,618/- can be claimed to be interest free funds available. Similarly, he rejected the assessee's contention regarding partner's fixed capital of Rs. 50,000/-. He held that same were contributed in the initial year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. No other documentary evidence regarding advances being purchase advances were produced. Regarding payment of Rs. 1,31,82,765/- for Shri Kairav A. Doshi, assessee stated that he is an employee. The Assessing Officer rejected this also. Furthermore, in absence of any further details Assessing Officer rejected the proportionate interest on account of following advances :- Arun Doshi HUF Rs. 46,51,887 Balaji Enterprises Rs. 5,00,000 Dhawal Enterprises Rs. 1,26,50,000 R.K. Corporation Rs. 75,60,000 Mr. Kairav A. Doshi-employee Others (para 3.3.5) Rs. 1,31,82,765 Rs. 3,56,866 Total Rs. 3,89,01,518 10. Against this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be examined. Assessing Officer has not given proper reason as to why this cannot be considered to be interest free funds available. Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities & Power Ltd (ITA No 1398 of 2008 vide order dated 9.1.2009) has duly expounded that when assessee has interest free funds, assessee can be given credit thereof and assessee need not show one to one nexus of interest free funds and deployment thereof. Hence, in my considered opinion assessee's appeal for A.Y. 2013-14 deserves to be set aside to the file of the Assessing Officer for limited purpose of examination of interest free funds in the shape of current capital amounting to Rs. 43,97,689/- is available to grant interest free advances. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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