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TMI Blog2017 (6) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,341/- which she advanced to her husband and which she is not supposed to charge any interest. The Revenue Authorities wrongly presumed that assessee should have charged interest on the entire amount of loan given to the husband irrespective of the fact that assessee was having her own interest free funds which was given without interest to her husband. Thus no merit for disallowance / addition to the income of the assessee under the head “Income from Other Sources”. - Decided in favour of assesse - ITA No. 6557/Mum/2016 - - - Dated:- 9-6-2017 - Shri R. C. Sharma, AM Assessee by : Shri B.V.Jhaveri Revenue by : Ms. Beena Santhosh ORDER Per R. C. Sharma (A.M): This is an appeal filed by the assessee against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleting the assessment u/s. 143(3) of the Act, the AO held that the assessee paid interest on HDFC Bank Loan on the outstanding amount of ₹ 2,66,23,895/- @ 12.46% of ₹ 33,19,577/- whereas the assessee charged interest to Mr. Shailesh Siroya on the outstanding amount of ₹ 3,68,23,513/- @ 9% amounting to ₹ 33,14,026/-. The AO, therefore, held that the assessee ought to have charged interest to Mr. Shailesh Siroya @ 12% amounting to ₹ 44,18,702/- and therefore, the assessee has charged lesser interest of ₹ 11,04,676/- and hence the addition of the said amount has been made to the income of the assessee under the head Income from other Sources . 5. By the impugned order, CIT(A) confirmed the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged interest of ₹ 33,14,026/-, i.e., @ 13.27%. At the same time, the assessee paid interest on HDFC Bank loan of ₹ 33,19,577/- (page 11). As on 1st April, 2010, the outstanding amount due and payable to HDFC Bank by the assessee was ₹ 2,66,23,895/- on which the assessee paid interest of ₹ 33,19,577/-, i.e., @ 12.47%. Thus, assessee has charged higher rate of interest and loan advanced to her husband as compared to the rate of interest paid to the HDFC Bank. Even as per the finding recorded by AO at para 5.1 of his assessment order, the assessee had her own interest free funds of ₹ 1,51,65,341/- to which the interest bearing loan from HDFC Bank of ₹ 2,49,71,198/- is added to arrive at the figure of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve of the fact that assessee was having her own interest free funds which was given without interest to her husband. 11. In the case of CIT vs. Gujarat Reclaim Rubber Products Ltd. in ITXA No.2116 of 2013, the Hon ble Bombay High Court in its order dated 8th December, 2015 held as under: (e) In any event, even on merits, we find that the impugned order records that it is undisputed that the Respondent-Assessee has interest free funds aggregating to ₹ 16.09 crore. The advances and interest made to group companies by the Respondent-Assessee is to the tune of ₹ 26.55 lakhs. The amounts borrowed in the aggregate being to the extent of ₹ 6.81 lakhs, i.e. both working capital and term loans. Thus, as held by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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