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TMI Blog2023 (7) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition made related to advances received from prospective buyers treated as unexplained credits and added to the income of the assessee under section 68 of the Act and of interest paid by the assessee disallowed in terms of provisions of section 36(1)(iii) of the Act. It was pointed out that the ld.CIT(A) had granted substantial relief to the assessee on both the issues, aggrieved by which, the Revenue has come up in appeal before us. The assessee has filed cross-objections. At the outset, the ld. Counsel for the assessee stated that he was not pressing the COs filed by the assessee in the Revenue's appeals. In view of this submission of the ld. Counsel for the assessee, all the COs. filed by the assessee are dismissed as not pressed. 3. Adverting now to the Department's appeal, the facts as emerge from orders of the authorities below and as also pointed out during the course of hearing before us, was that assessee is a private limited company primarily engaged in the business of development of land and residential plots. That the assessee had commenced scheme of development of plots in two projects, known as "Nalsarovar City" ("NSC"), Nr. Nalsarovar, Sanand-Nalsarovar Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the buyers were further directed to be sub-categorised into with PAN and without PAN details, and further, the ITAT directed, addition to be confined to only the category of simple advance where no PAN details were furnished, directing deletion in the other categories of advances. The AO, thereafter, worked out the disallowance to be sustained in all the years asper the direction of the ITAT. Subsequently, report of the AO in this regard was forwarded to the assessee, who with respect to the additions stated by the AO to be sustainable in terms of the direction of the ITAT in the preceding year on account of advances received during the year without PAN; furnished further details of PAN withrespect to those advances where available with him. Taking note of the same, and also noting the fact that the ITAT decision in A.Y 2008-09 was upheld by the Hon'ble High court dismissing the appeal filed by the Revenue against the same, the ld.CIT(A) further reduced the quantum of disallowance sustainable restricting it to the advances with respect to which, he noted that the PAN details were not available. This decision for A.Y 2010- 11, was applied by him in the subsequent years also, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the ld.CIT(A) during the appellate proceedings, who had directed the AO to determine the effect of the order passed by the ITAT in the year. The AO had furnished a remand report on the same and had stated that as per the direction of the ITAT all the advances received by the assessee were to be categorized in three categories as - * advances which had culminated into sale deed being executed. * advances which were refunded on account of booking being cancelled and * ultimately some buyers who simply had given advances which did not fall in either of the categories. 11. The AO had stated in the remand report that with respect to first two categories of advances which culminated into sale deed being executed and those which were refunded on account of booking being cancelled, the Tribunal had held that there was no case for making any addition on account of advances whose PANs were not available. The AO had stated that it was only with respect to buyers who amounts qualified as advance which did not fall either in two categories as stated earlier, that addition was directed to be sustained with respect to those advances where PAN details were not available. The AO ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2008- 09. Therefore, we do not find any merit in the grounds raised by the Revenue vi-a-vis restriction of addition made by the ld.CIT(A) under section 68 of the Act. The ground raised by the Revenue with respect to the issue of deletion of addition made u/s 68 of the Act in all the years involved before us, numbered as Ground No.1, is dismissed. 15. The only other ground of the Revenue relates to the disallowance of interest expenses made by the AO under section 36(1)(iii) of the Act which was deleted by the ld.CIT(A). This issue has arisen in A.Y. 2010-11, 2011-12 & 2013-14. For the sake of convenience, we are reproducing the ground raised in A.Y 2010-11. 1. Whether the Ld. CIT(A) was correct in deleting the addition made u/s 36(l)(iii) of tie Act on account of interest expenses amounting to Rs. 19,56,504/- 16. The facts relating to the issue as derived from the assessment order pertaining to Asst.Year 2010-11 is that the AO found huge advances made by the assessee, on which no interest was charged, and at the same time, he found that the assessee had incurred interest expenses also on loans taken. Accordingly, he disallowed interest paid by the assessee. The ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal is allowed." 17. Before us, the ld. Counsel for the assessee pointed out that, besides the above findings of the ld.CIT(A) that there was no merit in the disallowance in the absence of any evidence with the AO that interest bearing funds had been utilized for business purpose and that the interest free advances had been made in the course of business of the assessee, he pointed out that the assessee had also submitted that all these interest free advances had been given by the assessee from interest free funds with it in the form of instalments received from the prospective buyers of the plots. 18. With respect to the interest bearing funds taken by the assessee, he pointed out that it has been submitted to the ld.CIT(A) that the entire interest expenditure was incurred in relation to overdraft facility obtained by the company and it was further explained that overdraft facility is to meet working capital requirement of the business and in no case it can be said that the funds were utilized for non-business purpose. Our attention was also drawn to the submissions made by the assessee before the ld.CIT(A) that all the advances were given for purchase of land for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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