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TMI Blog2015 (9) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the original return of income declaring income at Rs. 26,80,390/- and agricultural income at Rs. 80,000/- on 31-10-2006. The case of the assessee was scrutinized u/s 143(3) of the Act. The AO observed that as per computation of income, the assessee had shown net income from other sources at Rs. 24,33,573/-. The assessee has also shown income from bank interest, interest loans etc. for Rs. 29,13,642/- and this income was reduced by Rs. 4,80,069/- on account of bank interest and bank charges. On further verification of the details, it is found by the AO that Rs. 4,80,069/-mainly included Rs. 4,72,324/- on account of bank interest. The assessee was having bank overdraft/ loan account with State Bank of India and HDFC Bank. The AO furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and no interest had been charged. 1. M/s. Anjali Traders Rs. 15,00,000 2. M/s. Anjani Drawing & Printing Mills Ltd. Rs. 9,00,000 3. M/s. Modi Flooring Stone (P) Ltd. Morak Rs. 16,26,000 4. M/s. Rajinder Kumar Garg Rs. 5,00,000 5. M/s. Sethia Corporation Rs. 6,00,450/- After considering the assessee's reply, the AO observed that though it is a fact that that these loans were given in the earlier years but they still form the part of borrowed loans/ overdraft. If these loans would have been received back, there would not have been any liability for payment of interest. It is further found by the AO that the assessee had given Rs. 60.00 lacs to M/s. Mittal Pigment (P) Ltd. on 12-12-2005 and no interest had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was held that that onus is on the assessee to satisfy the AO that the loans were used for business purposes. If the amount is advanced to the sister concern without charging the interest then there would be very heavy onus on the assessee to discharge the same. Even the plea of nexus of loans raised by the assessee with the funds advanced to the sister concerns on interest free basis, may be , it is pleaded to be out of sale proceeds or share capital or different account cannot be accepted. Entire money in a business entity comes in a common kitty. The AO further observed that the money received as share capital, as term loan, as working capital loan, a sale proceeds etc. did not have any different colour. Whatever are the receipts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,56,449/-. In these circumstances, it can be reasonably presumed that interest free advances were from assessee's own capital unless specific nexus is proved. The ld. CIT(A) had verified the details and it was found that the assessee had advanced money to M/s. Anjali Traders, M/s. Anjani Dyeing and Rajendra Kumar Garg out of over draft account. Considering the above, the ld. CIT(A) restricted the disallowance to 50% of the amount. Therefore, the addition of Rs. 2,40,035/- was confirmed by the ld. CIT(A) and remaining interest payment of Rs. 2,40,034/- was deleted. 2.3 Now the assessee is before us. The ld. AR of the assessee submitted that funds had not been advanced during the year under consideration but it was the loan outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit and loss account. No loss has been caused to the Revenue in the interest account. The AO had charged notional interest and had not disallowed interest because there was no claim of payment of interest for which he relied on the judgment of Hon'ble Delhi High Court in the case of CIT vs. Asian Hotels Ltd. 323 ITR 490. The ld. AR keeping in view of the above submissions prayed for deletion of addition which has been confirmed by the ld. CIT(A). 2.4 At the outset, the ld. DR relied on the order of the ld. CIT(A) 2.5 We have heard the rival contentions and perused the materials available on record. It is a fact that whatever names mentioned by the ld. CIT(A) in his findings were the loanee in preceding years. Therefore, the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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