TMI Blog2020 (11) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. Unexplained fixed deposit with ICICI Bank - AO was in possession of the Annual Information Report [AIR] which mentioned that assessee had two Term Deposits in ICICI Bank - HELD THAT:- The fact that Term Deposits reflected in the AIR were in the M G Road Br., Bangalore does not mean that the deposits in M G Road Br. Bangalore is in the name of assessee. Perusal of the letter dated 22.12.2012 by ICICI Bank, Alwarthirunagar Branch, Chennai does not show that the Term Deposits is in the name of assessee - issue should be set aside to the AO for a fresh consideration to ascertain the correct facts with regard to Term Deposits in M G Road Br. Bangalore, as to whether the same is in the name of assessee. If so, then the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 [the Act]. 4. The assessee is a company engaged in the business of rendering HR Consultancy and supporting services. In the course of assessment proceedings, the AO noticed that the assessee had claimed deduction of a sum of ₹ 1,74,86,837 on account of financial charges [interest], while computing income from business. The AO noticed that the assessee had given advances without interest to its related concern, M/s. Datacore Technologies Pvt Ltd. [DTPL]. The AO has further observed in the order of assessment that the assessee could not justify the business and commercial expediency in making loans to sister concern without charging interest. The AO accordingly held that borrowed funds on which interest was paid and which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) took the view that there is nothing brought on record to show that opening balance and outstanding loan given to sister concern was examined and accepted by the AO as a loan owing to commercial expediency. Aggrieved by the order of CIT(Appeals), the assessee preferred the present appeal before the Tribunal. 6. We have heard the rival submissions. The ld. counsel for the assessee brought to our notice that own funds available with the assessee were much more than the amounts borrowed. In this regard, it is seen that the borrowings as on 31.3.2010 was a sum of ₹ 10,46,81,000. The assessee s own funds in the form of share capital, reserve and surplus is a sum of ₹ 16,63,00,000. Though this fact has not been highlighted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val submissions. A copy of the availability of funds and investments made was filed before us which is at pages 38 to 42 of the assessee's paperbook and the same is enclosed as ANNEXURE-III to this order. It is clear from the said statement that the availability of profit, share capital and reserves surplus was much more than investments made by the assessee which could yield tax free income. 41. The Hon'ble Bombay High Court in Reliance Utilities Power Ltd. 313 ITR 340 (Bom) has held that where the interest free funds far exceed the value of investments, it should be considered that investments have been made out of interest free funds and no disallowance u/s. 14A towards any interest expenditure can be made. This view was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether revenue authorities were justified in making an addition of ₹ 8,15,000 on the ground that assessee had a fixed deposit with ICICI Bank and assessee failed to explain the source of funds out of which the said deposit was made. The AO was in possession of the Annual Information Report [AIR] which mentioned that assessee had two Term Deposits of ₹ 1,65,000 and ₹ 6,50,000 in ICICI Bank, Alwarthirunagar Branch, Chennai. The assessee submitted before the AO in a letter dated 26.12.2012 that it did not have any such Term Deposits as claimed by the AO based on the AIR . The AO, however, proceeded to make an addition of ₹ 8,15,000 u/s. 69 of the Act observing that the assessee failed to explain the source of funds for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2012 by ICICI Bank, Alwarthirunagar Branch, Chennai which is at page 38 of assessee s PB does not show that the Term Deposits is in the name of assessee. In the given circumstances, we are of the view that the issue should be set aside to the AO for a fresh consideration to ascertain the correct facts with regard to Term Deposits in M G Road Br. Bangalore, as to whether the same is in the name of assessee. If so, then the assessee should explain the deposit in the parameters laid down u/s. 69 of the Act. Accordingly, we set aside the order of the CIT(Appeals) on this issue and remand it to the AO for fresh consideration in light of the observations made in this order. 14. In the result, the appeal by the assessee is partly allowed. P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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