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TMI Blog2020 (10) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate proceedings before him. Even during the course of present proceedings, the assessee has not furnished any fund flow statement and therefore, the said findings of the CIT(A) remain uncontroverted and we are thus not inclined to interfere with the same and thus, the contentions so advanced by the ld AR cannot be accepted as the same remain unsubstantiated. Regarding the contention of the AR that other advances to related concerns are in nature of trade debtors and the matter has not been examined by the AO, the matter is set-aside to the file of the AO with a direction to verify the said claim and where, on verification, it is found that such transactions are in course of the assessee s business, the same is directed to be exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, the ld AR submitted that the appellant s interest free advance to relatives are to the tune of ₹ 66,00,347/-, as compared to the previous year of ₹ 70,80,336/-. Thus loans and advances to relatives have decreased during the year. The appellant has not charged any interest on the loans and advances as the appellant has sufficient interest free capital and trade creditors for making the interest free advance to the above parties. The ld. A.O. has not established the direct nexus between interest bearing loan taken and interest free loan given. 3. It was submitted that the assessee had capital of ₹ 37,62,815/-. Besides this, the assessee had interest free trade creditors(net) of ₹ 28,37,532/- as calculated below, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced at page no. 4-5 of paper book. Even if the balance of current account of related parties of ₹ 1,16,23,549/- is also considered, the position would be as under:- Total Liabilities as per Balance sheet (excluding capital) 3,95,33,213/- Total Assets as per balance sheet (excluding advance to family members and balance of current accounts of related parties) 2,50,72,132/- Trade Creditors Interest free 1,44,61,081/- From the above, it may be noted that the assessee had capital of ₹ 37,62,815/- and interest free trade creditors(net) of ₹ 1,44,61,081/- totaling to ₹ 1,82,23,89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital. Actually the whole of business is being run from the Interest bearing loans. 4) The AR has not taken into consideration the advances given to the related concerns. The picture depicts that the related concerns are thriving at the cost of assesse's business, which is not allowable under the Income Tax Act 1961. Only the expenses which are relatable to the business are to be allowed while computing the taxable income of the assessee. 5) The AR has stated that the assessee had interest free trade credits from which he could have given the loans interest free. The AR has not taken into consideration that the assessee has interest free trade debtors as well of ₹ 3,28,14,935/- of which the major were his related parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (₹ 1,16,23,549/- + ₹ 66,00,347/-). The appellant has not furnished any Fund Flow Statement to show that interest free advances have been given out of assessee s own funds or out of interest free funds available with him Neither the appellant has been able to show that the interest free advances were given for business purposes. In view of these facts, the proportionate disallowance of ₹ 7,98,401/- made by the appellant out of the total interest paid of ₹ 21,49,236/- is hereby confirmed. The ld DR accordingly supported the findings of the lower authorities. 8. We have heard the rival submissions and perused the material available on record. The contention of the assessee is that he has sufficient interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e needs to be determined. The position as reflected in the balance sheet shows the position at the year end and therefore, doesn t reflect the position of interest free capital and trade creditors or for that matter, the mixed funds which is available with the assessee as free cash and bank balance at the relevant point in time of making the individual advances during the year. In the instant case, where we look at the position of cash and bank balance as on the balance sheet date of 31.03.2014, it shows cash of ₹ 8,495 and bank balance of ₹ 45,697/- as compared to advances to relatives to the tune of ₹ 66,00,347/- and therefore, it stands proved that the position at the balance sheet date is not reflective of the availabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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