9911796707
TMI Blog2018 (8) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... direct that in the circumstances the nexus is found to exist, no disallowance of interest under section 36(1)(iii) of the Act be made to the extent pertaining to the amount so advanced. With this limited direction we restore the issue to the Assessing Officer to readjudicate the same. Decided in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance on account under section 36(1)(iii) of the Act was unwarranted. 7. The learned Commissioner of Income-tax (Appeals) after considering assessee's submissions noted that huge funds to the tune of ₹ 5,68,42,578 had been advanced to the partner Shri G. S. Sethi without any interest and that simultaneously, the assessee was claiming deduction on interest paid to banks for availing of over draft facility to the tune of ₹ 39,69,660. The Commissioner of Income-tax (Appeals) further noted that the assessee was availing of loan/overdraft facility/credit facility from Hindu Co-operative Bank and the amount outstanding from the said bank as at the end of the year was ₹ 3,03,37,185. The Commissioner of Income-tax (Appeals) further noticed that the entire advance had been made to the partner from the said bank only on which interest was being paid by the assessee by issuing cheques. Considering the above facts, the learned Commissioner of Income-tax (Appeals) held that clearly the interest bearing funds had been used for making interest-free advance to the partner which was not shown to be for business purpose and, therefore, for the said reason upheld the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50, The Hindu Co.Op. Bank 3. 1-5-2012 30,00,000 Cheque No. 1111655, The Hindu Co.Op. Bank 4. 21-5-2012 20,00,000 Cheque No. 1111664, The Hindu Co.Op. Bank 5 1-6-2012 21,50,000 Cheque No. 1111673, The Hindu Co.Op. Bank 6. 4-6-2012 10,00,000 Cheque No. 1111674, The Hindu Co.Op. Bank 7. 5-6-2012 20,00,000 Cheque No. 111 1676, The Hindu Co.Op. Bank 8. 5-6-2012 20,00,000 Cheque No. 1111677, The Hindu Co.Op. Bank 9. 5-7-2012 25,00,000 Cheque No. 1111693, The Hindu Co.Op. Bank 10. 18-7-2012 20,00,000 Cheque No. 1111700, The Hindu Co.Op. Bank 11. 8-8-2012 5,00,000 Cheque No. 1122310, The Hindu Co.Op. Bank 12. 24-8-2012 2,35,000 Cheque No. 341288, The Hindu Co.Op. Bank 13. 25-8-2012 1,00,000 Cheque No. 1122316, The Hindu Co.Op. Bank 14. 3-9-2012 1,00,000 Cheque No. 1122328, The Hindu Co.Op. Bank 5.4.3 Perusal of the above clearly shows that the contention of the appellant that the interest-bearing funds are used for the purpose of business is not supported by the facts on record. It is clearly seen that the interest-bearing funds have been advanced to the partner in question without charging a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee contended that the funds in the Hindu Co-operative Bank were mixed funds wherein the trading receipts of the assessee were also deposited. Copy of the loan account of the assessee with the said bank for the impugned period was filed showing deposit of sale proceeds in the said account . The learned counsel for the assessee stated that in fact all bank accounts maintained by the assessee contained mixed funds wherein the sale proceeds were also deposited by the assessee. The learned counsel for the assessee also pointed out that the turnover of the assessee during the year was ₹ 18.55 crores which was all deposited in these bank accounts and the advances, therefore, made to the partner could not be attributed only to the loan taken by the assessee but could be attributed to the trading receipts of the assessee. The learned counsel for the assessee, therefore, stated that in view of the above, no disallowance of interest under section 36(1)(iii) of the Act was warranted. 10. The learned Departmental representative, on the other hand relied upon the order of the Commissioner of Income-tax (Appeals). 11. We have carefully considered the contentions of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, it can be safely held that the interest-free funds had been used for making advances to the partners warranting no disallowance of interest under section 36(1)(iii) of the Act. But we find that the facts in this regard need to be examined. We, therefore, consider it fit to restore the issue to the Assessing Officer with the limited direction to examine the nexus, if any, between the trading receipts of the assessee deposited in the Hindu Co-operative Bank account maintained by the assessee and the amount advanced to the partner and direct that in the circumstances the nexus is found to exist, no disallowance of interest under section 36(1)(iii) of the Act be made to the extent pertaining to the amount so advanced. With this limited direction we restore the issue to the Assessing Officer to readjudicate the same. The assessee is directed to furnish all necessary evidences to prove its case and the Assessing Officer is directed to afford adequate opportunity to the assessee to do the same. In view of the above, the ground of appeal raised by the assessee stands allowed for statistical purposes. 13. In the result, the appeal filed by the assessee is allowed for statisti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
