9911796707
TMI Blog2021 (10) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of Rs. 2,28,000/- made U/s 36(1)(iii) of the Act, without properly appreciating the facts of the case and the material brought on record." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. In the first round of litigation, the appeal of the Revenue was dismissed by the Coordinate Bench (SMC) vide its order dated 04/10/2019 on the ground of low tax effect but the Bench had given liberty to the Revenue that the department is at liberty to file the Misc. application in case tax effect in this appeal was found to be more than Rs. 50.00 lacs on the case falls in any of the exceptions of the CBDT circular. 4. Against the said order of the Tribunal, the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the A.O. and submitted that the original assessment order in the present case was passed U/s 143(3) of the Act on 16/03/2015 thereby assessing total income of Rs. 16,91,387/- as against the returned income of Rs. 16,81,520/-. However, subsequent to the completion of the assessee, it was noticed that certain income in the case of the assessee had escaped assessment, therefore, after recording reasons, notice U/s 148 of the Act was issued and after providing opportunity of hearing to the assessee, order U/s 143(3) r.w.s. 147 of the Act was passed. It was further submitted by the ld. DR that the assessee had taken unsecured loans from various persons and paid interest @ 12% amounting to Rs. 10,09,536/- and on the other hand, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act came into the knowledge of the assesse first time that this reopening was on the basis of audit objection. Therefore the AR of the assesse has prayed before the Hon'ble Bench that assesse has right to raise the objection against the validity of reopening of the assessment and the Hon'ble Bench has mentioned in the recalling order dated 25/08/2019 that the assesse shall have a liberty to raise the objection if any against the decision of the AO based on audit objection. Therefore exercising our this right we firstly object that the reopening on the basis of audit objection is not valid. In this regard we place our reliance on the case of M/s Larsen and Toubro Limited vs. State of Jharkhand and others (Supreme Court of India) 5390 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has closed business nexus with the done persons and interest free loan were given on account of business expediencies and in normal course of business deals. Therefore, it has been observed by the learned CIT(A) that the assesse has own funds of Rs. 45,68,725/- which were not interest bearing and otherwise all the advances given by the assesse for the purpose of business and not for any other purpose, therefore the addition was deleted by him. The details of interest free loans given by the assesse considered by the learned AO are as under: - 1. Ridhi Sidhi Cement Pvt Ltd 700000 2. Shree Balaji Agro Industries 500000 3. Shri Jitendra Kumar 699999 Total 1899999 The advanced to M/s Ridhi Sidhi Ceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ep the regular supply in case of payment is delayed in routine. Therefore this advance was made as deposit against supply of goods. Shri Jitendra Kumar is a broker through whom goods were purchased and sold. He played a major role in the business of the assesse for securing purchase orders and sale of goods. So this advance was also for making good business relation. The ld AR has fairly submitted before us that all the loans/advances given to the above parties were for the purpose of business and not for any other purpose. The ld. AR has submitted that the advance to M/s Ridhi Sidhi Cement Pvt. Ltd was given for the purpose of business dealing as the same was a group company and assesse is also director and share holder of the said company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be allowed as business expenditure. Moreover, we also draw strength from the decision of the Hon'ble Supreme court in the case of S.A. Builders Ltd. Vs CIT 288 ITR 1 (SC) in which the concept of "commercial expediency" was used. Thus, according to the Hon'ble Supreme Court, where the funds of business are diverted for interest free loans, the main criteria for permissibility of interest on those funds are based on whether it was for commercial expediency or not. The phrase "commercial expediency" has following important traits: "* Such purpose as is expected by the assessee to advance its business interest. * May include measures taken for preservation, protection or advancement of its business interests. * To be distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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