9911796707
TMI Blog2014 (11) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer made an addition of Rs. 36,40,518/- for not allowing the interest on loan. The Assessing Officer held that assessee has advanced loans to various related persons/entities without charging interest from the borrowed funds on which the interest was being paid by the assessee. It was also held that assessee has no business purpose for advancing these interest free loans. As per Assessing Officer's version, the borrowed funds were not squarely used for business purposes as the assessee has not shown any business exigency for granting such interest free loans outstanding as on 31.03.2009 of Rs. 58,75,670/- to Shri Suneet Kumar, Rs. 5,90,50,000/- to M/s. Spice Cine Vision, Rs. 15,10,000/- to Shri Jasjeet Singh Shergill and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble ITAT held that the decision of the Punjab & Haryana High Court in the case of CIT vs Abhishek Industries Ltd. (2006) 286 ITR 1, was at variance with the decision of the jurisdictional High Court in the cases of CIT vs Tin Box Co. (2003) 260 ITR 637 and CIT vs Orissa Cement Ltd (2001) 252 ITR 878. As per law of precedence, the decision of the jurisdictional High Court will prevail over the decision of other High Courts. Moreover, the decision of the Punjab & Haryana High Court in the case of Abhishek Industries Ltd. (supra) was followed in the cases of Munjal Sales Corpn. vs CIT at 298 ITR 288 (P&H) and at 298 ITR 294 (P&H), which have been overruled by the. Hon'ble Supreme Court in the case of Munjal Sales Corpn. vs CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has deposited Rs. 1,03,15,895/- under the head "Bank charges and interest" to its profit & loss account. The assessee has secured loan of Rs. 10,33,63,997/- from the Syndicate Bank. The assessee has charged interest @ 8% from M/s. M/s. Nalini Silk Mills on the advance of Rs. 11,24,86,647/-. However, on the other loan and advances, no interest has been charged. Since the assessee is paying interest on the borrowed funds and the assessee has failed to establish the business necessity for advancing such interest free loans, therefore, the CIT (A) was not justified in allowing the claim of the assessee. He pleaded to sustain the order of the Assessing Officer on this issue. He also pleaded that section 36(1)(iii) of the Income-tax Act, 1961 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 15,45,96,046.94 at the end of the financial year 2008-09, i.e. as on 31.03.2009. The interest free advances were of Rs. 6,59,25,670/-. In view of the various case laws relied upon by the ld. AR including the Hon'ble Bombay Hon'ble High Court decision in the case of CIT vs. Reliance Utilities, cited supra,, the CIT (A) was justified in deleting the addition. In the aforesaid decision, the Hon'ble Bombay High Court has held as under :- ".....It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle, therefore, would be that if there are funds available both interest-free and over draft and / or loans taken, then a presumption would a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
