TMI Blog2019 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the same would show that the assessee appears to have sold some properties to M/s TIPL and received money in installments, while the issue before us is with regard to the advances given by the assessee to M/s TIPL. In any case, this ledger account copy and the nature of business transactions have not been examined by CIT(A). There is lack of clarity on the facts surrounding the issue. The assessee claims that it has not diverted any loan funds for giving impugned advances and it has used only its rental income proceeds for giving the advances. However, CIT(A), after analyzing the financial statements of the assessee, has given a finding that the assessee does not possess interest free funds equivalent to or in excess of the advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) of the Act. The Revenue carried out search and seizure operations in the case of Shri. Sanjay Ghodawat Group of cases located at Kolhapur. Consequent thereto, survey operations were conducted under section 133A of the Act in the Embassy Group of cases including the assessee herein. The impounded materials revealed that the assessee has advanced money from time to time to a company named M/s. Topaz Investments Pvt. Ltd., as under: Financial Year Amount Advanced (Rs.) 2004-05 4,53,52,000 2005-06 3,83,30,000 Total 8,36,82,000 4. It was noticed that M/s Topaz Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,560/- 2007-08 29,00,000/- 6. In the appellate proceedings, the learned CIT(A) noticed that the assessee has paid advance amount to M/s. TIPL every month i.e., the assessee paid a sum of ₹ 56.36 lakhs every month for first few months and subsequently ₹ 72.50 lakhs was paid every month from August 2005 to March 2006. Accordingly, the learned CIT(A) took a view that the amount so paid on monthly basis could be for some other purpose, since such kind of payments made instalments could not be for the purpose of purchase of land as claimed by the assessee. However, the learned CIT(A) noticed that the assessee has not confirmed if any land was purchased subsequently with the mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st attributable to such advance. 8. The learned CIT(A), while adjudicating identical addition made in AY 2006- 07 and 2007-08, has also considered the position of own funds available with the assessee. He noticed that the own funds available with the assessee in the form of share capital and reserves and surplus were far less than the amount advanced to M/s. TIPL. Hence, the learned CIT(A) rejected the contentions of the assessee that the amount advanced to TIPL was given out of own interest free funds. Accordingly, the learned CIT(A) confirmed the contention of interest income made by the AO in all the 3 years. Aggrieved by the order passed by the learned CIT(A), the assessee filed these appeals before the Tribunal. 9. The Ld A.R sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax authorities are not justified in computing interest income, when there is no such agreement between the parties. Accordingly he contended that the Ld CIT(A) was not justified in confirming the addition made by the AO in all the three years under consideration. 10. The Ld D.R, on the contrary, submitted that the assessee did not have any interest bearing funds and hence the loan funds only has been diverted by the assessee to M/s TIPL. He further submitted that the assessee did not prove that the purpose of giving advances was for business purposes. He submitted that the Ld CIT(A) has examined the issue in proper perspective and accordingly confirmed the disallowance of interest expenditure. 11. We have heard rival contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for giving impugned advances and it has used only its rental income proceeds for giving the advances. However, the Ld CIT(A), after analyzing the financial statements of the assessee, has given a finding that the assessee does not possess interest free funds equivalent to or in excess of the advance given. The Ld A.R also submitted that the quantum of advance mentioned by the tax authorities is not correct. 13. In view of the above, we are of the opinion that this issue requires fresh examination at the end of Ld CIT(A) by providing one more opportunity to the assessee to substantiate its case. Accordingly we set aside the orders passed by Ld CIT(A) on this issue in all the three years under consideration and restore the same to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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