TMI Blog2018 (3) TMI 1998X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 36(1)(iii) of the Act have been complied with in this case. Further, the assessee specifically pleaded before Ld.CIT(A) that borrowed funds of the assessee are for a sum of Rs. 5.15 crores and utilization of the borrowed funds are of Rs.5.22 crores in making deposit with the bank, cash in hand and fixed assets which also tally with the balance sheet of the assessee. Therefore, Ld. Counsel for the assessee rightly contended that the amount of loans on which interest has been paid, has been used for the purpose of business. In the case of COMMISSIONER OF INCOME-TAX AND ANOTHER VERSUS RADICO KHAITAN LTD. [ 2004 (9) TMI 37 - ALLAHABAD HIGH COURT] , Hon ble Allahabad High Court decided the issue in favour of the assessee in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interests on secured and unsecured loans that the funds raised by the assessee have not been utilized for the purpose of business and no income is accrued on account of utilization of these funds. The AO on going through the details submitted by the assessee perused that the assessee has made payment interest of Rs. 23,64,722/- and bank commission of Rs.21,42,095/-. The AO noted that the business of the assessee was sale and purchase of foodgrains on commission basis and earning income of Ahrat . It has been perused from the details of bank loan accounts and unsecured loans raised from the banks, that substantial amount of interest has been put to use for the purpose other than business of dealing in foodgrains i.e. making of advances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch have been distinguished by the assessee and reproduced in the appellate order. It was submitted that the disallowance on account of interest paid on borrowed money is hypothetical and such addition is liable to be deleted. 4. Ld.CIT(A), however, confirmed the addition and dismissed the appeal of the assessee. His findings in para 4.2 of the appellate order are reproduced as under:- 4.2. Ground no. 02 relates to disallowance of interest of Rs.45,06,817/- u/s 36(1)(iii) of the Act. The AO has observed that the business of the assessee is sale and purchase of food grains on commission basis and the funds raised, including funds received from bank in the name of his proprietary concern M/s Des Raj Ashutosh, by the assessee on which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unsecured loan without charging interest though interest has been paid to the bank and the persons from whom unsecured loans have been taken. The appellant's AR has tried to distinguish the case laws relied upon by the AO in the assessment order but his observations are not applicable to the facts of this case brought out herein above, rather all the case laws are squarely applicable to the facts of this case. In this view of the matter, the addition of Rs.45,06,817/- made is sustained. This ground is accordingly dismissed. The AO is however advised to bring facts relevant to the matter on record in the assessment order, analyse the facts as has been done herein above, and not make additions in an ad hoc manner with perfunctory remar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been diverted by the assessee to its sister concern. The findings of the Tribunal being based on the relevant evidence on record, no question of law, much less a substantial question of law, arose from the orders of the Tribunal. 6. Ld. Counsel for the assessee, therefore, submitted that since the assessee has sufficient funds other than the borrowed funds for giving to others, therefore, addition is wholly unjustified. On the other hand, Ld.DR relied upon the orders of the authorities below. 7. We have considered rival submissions and perused the material on record. Ld. Counsel for the assessee filed balance sheet of the preceding AY 2010-11 and also filed a written note to highlight in preceding AY 2010-11, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount in question as loan to its sister concern, which finding had not been specifically challenged in the present appeal, the conditions of section 36(1)(iii) of the Act had been complied with and, therefore, the assessee company was entitled to full allowance of the amount of the interests paid by it on borrowed capital. The decision relied upon by Ld. Counsel for the assessee in the case of CIT vs TIN Box company (supra) also supports to the facts of the case. It may also be noted here that the AO has failed to point out any nexus between the borrowed funds and the amounts given by the assessee to others without interest. The assessee, therefore, proved that borrowed funds have been used for the purpose of business, therefore, no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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