9911796707
TMI Blog2016 (9) TMI 1606X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the CIT (Appeals) has erred in confirming the disallowance of interest on account of the loan/advances of Rs. 1,58,54,874 to its three Directors. In the scrutiny assessment, the Assessing Officer noticed from the details filed by the assessee that the assessee claimed the interest of Rs. 2,82,57,064 on loans aggregating to Rs. 21,72,89,376. The Assessing Officer further noticed that the assessee has given advances amounting to Rs. 1,58,64,874 to its three Directors as under : S.No. Name of the Director Advance Given (Rs.) 1. Deepak Gandhi 5,86,000 2. S.K. Gandhi 92,72,000 3. Manish Gandhi 60,06,874 Total : 1,58,64,874 Accordingly, the Assessing Officer has worked out the proportionate interest of Rs. 20,62,434 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's own fund is utilized for the purpose of giving interest free advances to the Directors. 4. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that the assessee has failed to show the direct nexus between the advances given to the Directors and the assessee's own fund. He has further contended that when the assessee's own fund is already utilized for acquisition of the assets then it cannot be presumed that the own fund is available for giving loan to the Directors. 5. We have considered the rival submissions as well as the relevant material on record. The assessee has claimed that the assessee's own fund comprising share capital, share application money, reserves and surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mind the P&L a/c and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be rejected on this count also. 9. Apart from that we have noted earlier that both in the order of the CIT(A) as also the Tribunal, a clear finding is recorded that the assessee had interestfree funds of its own which had been generated in the course of the year commencing from 1st April, 1999. Apart from that in terms of the balance sheet there was a further availability of Rs. 398.19 crores including Rs. 180 crores of share capital. In this context, in our opinion, the finding of fact recorded by CIT(A) and Tribunal as to availability of interest-free funds really cannot be faulted. 10. If there be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and ITAT." Thus the contention raised by the revenue that own fund has been utilized for the purpose of fixed assets was not accepted by the Hon'ble High Court and it was held that if there are funds available both interest free and loan then the presumption would arise that the investment would be out of interest free fund generated or available with the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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