TMI Blog2022 (5) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... established with proper material on hand for the socalled business exigency. Thus, the assessee s arguments that there was a running account with the sister concern viz. Kamal Freight Pvt.Ltd., which was not demonstrated any business expediency between the assessee company with that of its subsidiary company. In the above circumstances, we do not find any infirmity in the order passed by the lower authorities, more particularly, the ld.CIT(A) has clearly held that judgement of S.A. Builders facts [ 2006 (12) TMI 82 - SUPREME COURT] is not applicable to the assessee s case. Punjab Haryana High Court in the case of C.R. Auluck Sans P.Ltd., [ 2014 (2) TMI 73 - PUNJAB AND HARYANA HIGH COURT] has also upheld disallowance made under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had claimed interest expenses of Rs.38,95,633/- on unsecured loans, but it had given interest free advance to Shri Kamal Deshraj Dogra for non-business purpose. The assessee has extended that substantial amount of Rs.5.97 crores as loan to Shri Kamal Deshraj Dogra during the financial year, and not charged interest on the loan amount, which is contrary to section 36(1)(iii) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Therefore, show cause notice was issued to the assessee as to why proportionate interest on the interest free loans given to Shri Kamal Deshraj Dogra should not be disallowed. In response to the same, the assessee stated that loans were given for business purpose, and for purchase of the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has clearly brought out the fact that appellant has borrowed fund and same has been utilised to give advance .free loan to Shri Kamal Dogra. Therefore, AO was justified to make disallowance of interest u/s. 36(1)(Hi) of the Act, As regard to appellant's argument that the payment was made for business expediency, the appellant has not been able to demonstrate the business expediency in advancing interest free loan. Initially the appellant has argued that loan was advanced to purchase land for the company but same was found incorrect. Appellant's argument that there was a running account with sister concern M/s. Kamal Freight Pvt. Ltd. in no way demonstrates any business expediency. Therefore, the decision of S. A.Builders is not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Dogra were made for non-business purposes and thereby confirming the disallowance of Rs. 16,81,184/-. 5. At the time of hearing, the ld.counsel for the assessee has not pressed ground no.1.1 to 1.3, hence, the same are dismissed as not pressed. Now only effective ground for adjudication is ground no.2.1 and 2.2. 6. The ld.counsel for the assessee submitted that the AO failed to appreciate the interest on loan given to Shri Kamal Deshraj Dogra was not charged on account of commercial expediency. As per the land purchase agreement executed on 1.4.2014 between Shri Shankar Lal Kabra, and Shri Kamal Deshraj Dogra in his capacity as director of the assessee-company. It was agreed to sell the plot situated at Bareja, Ahmedabad for a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and director Shri Kamal Deshraj Dogra attended the hearing and admitted that they were not able to produce Shri Shankar Lal Kabra for verification. It is further agreed that the no payment was made to Shri Kamal Deshraj Dogra for purchase of land. Further, no evidence has been furnished to establish that Shri Shankar Lal Kabra is the owner of the land. Thus, documents and agreement submitted are only to camouflage to protect the provisions of section 2(22)(e) which is an after-thought story made by the assessee. Further, the AO justified in making disallowance under section 36(1)(iii) of the Act, which does not require any interference, and therefore, the ld.DR pleaded that the ground raised by the assessee is to be dismissed. 8. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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