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Issues involved: Cross Appeals against the order of Ld.CIT(A)-IX, New Delhi for Assessment Year 2007-08.
Revenue's Appeal: - The Revenue challenged the deletion of addition made by the Assessing Officer for disallowing proportionate interest on interest-free advances given by the assessee. - The Revenue argued that the precedent set by the Tribunal in the assessee's own case should be followed, as upheld by the Chandigarh Bench. - The assessee contended that the facts of the current year differ, citing the judgement of the Hon'ble Supreme Court in S.A.Builders case. - The assessee relied on various legal points to support its case, including the purpose of borrowings, availability of interest-free funds, and commercial expediency in giving advances. Decision on Revenue's Appeal: - The Tribunal noted that loans from banks are typically for specified purposes and are monitored by the bank, creating a presumption of proper utilization. - The Tribunal referred to the conflicting judgements of the P&H High Court and the Supreme Court regarding commercial expediency in such cases. - Applying the Supreme Court's propositions, the Tribunal upheld the CIT(A)'s order, as the Assessing Officer had no material to disbelieve the assessee's claim. - The Tribunal also considered the substantial interest-free funds available with the assessee, supporting the presumption that they were used for interest-free advances. - The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision. Assessee's Appeal: - The assessee's counsel did not press the appeal due to the small amount involved, with the condition that it would not set a legal precedent. Final Decision: - Both the Revenue's and the assessee's appeals were dismissed by the Tribunal. - The order was pronounced in the Open Court on 29th August, 2012.
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