TaxTMI 
TaxTMI 
2024 (9) TMI 736
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.... than the quantum of interest free advance of Rs. 14 Crs. Given to sister concern and the A.O. has not established any direct nexus between the loan funds and interest free advance given to sister concern and hence, it could be safely presumed that the interest free advance was given out of own funds and therefore, the disallowance of interest of Rs. 52,59,935 was not justified. 3. The learned CIT(A) erred in not appreciating that the impugned issue was no more res Integra and the same was squarely covered in favour of the assessee by the law laid down by Hon'ble Supreme Court in Reliance Industries Ltd. [410 ITR 466(SC)]and South Indian Bank Ltd. v. CIT [(2021) 438 ITR 1] and therefore, the disallowance of interest of Rs. 52,59,935 ought to have been deleted. 4. The learned CIT(A) erred in confirming the disallowance of Rs. 45,00,000 in respect of compensation paid by the appellant company to a third party towards cancellation of agreement to sale of land owned by its subsidiary company without appreciating that the said payment was made towards business purposes and the same was never claimed as a deduction by its subsidiary company and therefore, there was no reason to d....
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....sing Officer made addition of Rs. 52,59,935/- by observing as under: "3.2 Inferences based on the replies of the assessee's and facts of the case. 1. The assessee has paid Rs. 14,00,00,000/- to Anishka Developers Pvt. Ltd. And showing the same in its financials as interest free loan/advances given. As per the documents submitted by the assessee in its reply dated 10.09.2022, the assessee entered into an agreement with Anishka Developers on 07.11.2007, as per which the assessee had to deposit Rs. 19,00,00,000/- with Anishka developers on or before 31.03.2008 and Anishka Developers shall complete the construction of a hotel building as per the details and specification mentioned in the said agreement within the period of 36 months, i.e till 30.09.2009. But the assessee is still claiming this fund as interest free loan/advance given. In its reply dated 29.11.2022 also the assessee is claiming it to be business agreement and failed to submit anything regarding duration of validity of the concerned agreement because (as the agreement) the Anishka Developers had to complete the work (as mentioned in agreement) within 36 months from the date of agreement. It means that if the work had....
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.... has to be paid. The Hon'ble Supreme Court in the case of CIT Vs Mir Mohammed All (1964) reported in 53 ITR 165 has held that the onus is on the assessee to prove that interest is deductible. In the light of the above discussion, since the appellant had failed to establish the direct nexus between the interest-free funds available as on the date of advance and the loans given to the sister concern, I am of the considered opinion that the AO was right in disallowing interest debited amounting to Rs. 52,59,935/-. Accordingly the grounds raised are dismissed." 8. Aggrieved with such order of CIT(A) / NFAC, the assessee is in appeal before the Tribunal. 9. The Ld. Counsel for the assessee referring to the copy of the Balance Sheet as on 31.03.2008 submitted that the own capital and free reserves & surpluses of the assessee as on 31.03.2008 was Rs. 46.57 crores, out of which an amount of Rs. 14 crores was advanced to the sister concern without any interest. He submitted that from assessment year 2008-09 till the assessment year 2020-21 no such disallowance of interest was made by the Assessing Officer. However, for the impugned assessment year, the Assessing Officer made the d....
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....the other hand heavily relied on the orders of the Assessing Officer and the CIT(A) / NFAC. 13. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case has made addition of Rs. 52,59,935/- being the interest debited in the Profit and Loss Account on the ground that the assessee has given interest-free advance of Rs. 14 crores to the sister concern M/s. Anishka Developer Pvt. Ltd., whereas it is paying interest to the bank on the loan borrowed. We find the CIT(A) / NFAC upheld the action of the Assessing Officer, reasons of which are already reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the advance of Rs. 14 crores was given during the financial year 2007-08 when the own capital and free reserves & surpluses of the assessee was at Rs. 46.57 crores which was much more than the amount of Rs. 14 crores given as interest-free advance to the sister concern M/s. Anishka Developer Pvt. Ltd. Even as on 31.03.2....