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TMI Blog2020 (4) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ks are more than this outstanding liability. Hence, assessee s claim of interest free funds is not sustainable. Submission that these are purchase advances have not at all been proved. Furthermore, assessee itself started charging interest on these loans in subsequent years. Hence, order for A.Y. 2010-11 is duly sustained. For A.Y. 2013-14 also position is similar. No evidence whatsoever of subsequent purchases have been produced. Hence, claim that these parties are purchase advances is not at all proved. Furthermore, for a part plea of interest free advances is not sustainable on the same basis as in the earlier year as sundry creditors for goods and expenses cannot be claimed to be interest free funds available with the assessee. More so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the disallowance of interest of ₹ 3,14,075/- u/s. 36(l)(iii) of the Income Tax Act 1961. ii) On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred confirming the disallowance on the ground that the Assessing Officer was justified in holding that the appellant had no interest free funds out of which the appellant could give interest free loans of ₹ 25,46,000/-. iii) On the facts and in the circumstances of. the case and in law, the learned C.I.T.(A) erred in confirming the findings of the Assessing Officer that the appellant failed to prove that it had interest free fund of ₹ 2,10,76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was not satisfied. He asked the assessee to furnish fund-flow statement to show nexus of deployment of interest free funds for extending advances to the following parties :- i) Virendra Sutaria ₹ 16,36,000 ii) Virendra Sutaria (HUF) ₹ 5,00,000 iii) Pratibha Sutaria ₹ 2,50,000 iv) Rajan Gupta ₹ 1,60,000 Assessing Officer observed that the above funds were claimed to be business advances. However, the assessee failed to furnish any evidence in this regard. 6. Assessing Officer rejected the assessee s submission that sundry creditor for goods amounting to ₹ 2,05,06,270/- and sundry creditors for expenses of ₹ 5,20,618/- can be claimed to be interest free funds available. Similarly, he rejected the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary evidence regarding advances being purchase advances were produced. Regarding payment of ₹ 1,31,82,765/- for Shri Kairav A. Doshi, assessee stated that he is an employee. The Assessing Officer rejected this also. Furthermore, in absence of any further details Assessing Officer rejected the proportionate interest on account of following advances :- Arun Doshi HUF ₹ 46,51,887 Balaji Enterprises ₹ 5,00,000 Dhawal Enterprises ₹ 1,26,50,000 R.K. Corporation ₹ 75,60,000 Mr. Kairav A. Doshi-employee Others (para 3.3.5) ₹ 1,31,82,765 ₹ 3,56,866 Total ₹ 3,89,01,518 10. Against this order the assessee appealed before learned CIT(A). Learned CIT(A) confirmed the Assessing Officer s action. 11. Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e funds available. Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities Power Ltd (ITA No 1398 of 2008 vide order dated 9.1.2009) has duly expounded that when assessee has interest free funds, assessee can be given credit thereof and assessee need not show one to one nexus of interest free funds and deployment thereof. Hence, in my considered opinion assessee s appeal for A.Y. 2013-14 deserves to be set aside to the file of the Assessing Officer for limited purpose of examination of interest free funds in the shape of current capital amounting to ₹ 43,97,689/- is available to grant interest free advances. The Assessing Officer shall examine this aspect in the light of observation as above and if interest free funds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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