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TMI Blog2022 (7) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest on loans received from the bankers for working capital requirements. 2. The Ld. CIT (A) has erred on facts of the case and in law in arriving at the conclusion that the loan given to the sister concern was in the guise of a trade debt and that the business expediency of the transaction was not proved." 3. Brief facts of the case are that assessee is engaged in the business of rental trading of pharmaceutical products. In the present case, Assessing Officer (AO) made proportionate disallowance of interest on ad hoc basis after noting that assessee had both interest bearing funds and interest free funds at his disposal. The order of AO in this regard can be gainfully read as under :- "3.2 The assessee did not file the details i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A)-35 has allowed for A.Y. 2014-15. The facts emerging out from the assessment order and annual accounts of the assessee: i. Trade receivable has gone up from Rs.71.05 crores to Rs.105.90 crores Aprox. ii. Term loan taken from the bank has increased from Rs.6,45,00,000/- to Rs.14,98,32,276/-. iii. The appellant has also availed cash credit facility from bank of Rs.4,92,91,957/-. iv. Loan to related party has gone down from Rs.2,76,83,261/ - to Rs.2,03,19,763/-. However trade debt from related party has gone up substantially. 5.6 The Ld. AR has not been able to explain where the loan and the cash credit facility availed from bank has been utilized. The AO has given categorical finding that the trade debt in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in the case of CIT vs. Reliance Utilities & Power Ltd. 313 ITR 340 and CIT vs. HDFC Bank Ltd. 366 ITR 505. This aspect needs to be considered by the AO in making the disallowance which has not been done. 7. Furthermore, authorities below have shown that there is abnormal increase in sale to related parties, hence the debt is not normal. In our considered opinion, this plank is not acceptable as Revenue authorities are accepting the sales and no disallowance has ever been done in this regard. Moreover, the genuineness of the debtors cannot be doubted without any enquiry in this regard. In this view of the matter, in our considered opinion, the matter needs to be remitted back to AO. AO is directed to decide the issue afresh in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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