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TMI Blog2022 (4) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ation actually pertains to the month of March 2008. But no benefit has been extended by the authorities below. If the assessee has offered the income pertaining to the month of March 2009, in the subsequent month i.e. April 2009, thus if any addition is made in the current year, the same would lead to double addition which is unwanted. Thus, we are of the view that the justice would be served to the Revenue as well as assessee if the assessee is able to prove that the difference of income pointed out by the AO has been offered to tax in the subsequent year. If that be so, no addition is warranted. Assessee has not challenged the addition made by the authorities below with respect to the interest from bank Accordingly we confirm the same. Hence the ground of appeal of the assessee is partly allowed for the statistical purposes. Addition of interest on the loan bearing funds diverted for non-commercial purposes - assessee on one hand is incurring interest expenses on the borrowed fund and on the other hand the assessee has advanced money without charging any interest thus the AO worked out the proportionate amount of interest on such interest free loans and advances and ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of interest to the extent interest free loans and advances given for different years. 3. The Id. C1T-(A) has also erred in not considering the submission made before AO and learned CIT by your appellant. It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your appellant reserves right to add, alter, amend to withdraw and or all Grounds of Appeal. 3. The 1st issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by sustaining the addition made on account of difference of income reported in the return of income viz a viz in form 26AS issued by the Income Tax Department. 4. The AO during the assessment proceedings observed certain differences between the income declared by the assessee in the return of income viz a viz the income reported in form 26 AS. The details of the difference of the income stand as under: Name of the person from whom income received. Income as reported in 26AS Income as per details of income/ IDS claimed details furnished by the assesses. Difference i.e. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axed as income in the current year only. Accordingly, additions of these amounts are also upheld. 4.3.2. So far as discrepancy regarding Indian Oil Corporation of ₹ 39,5067- is concerned, the AO is directed to verify the appellant's claim that he has shown income which is more than that reflected in Form 26AS. If it is found to be correct, then the addition of ₹ 39,506/- will stand deleted. 4.3.3. So far interest received from Indian Bank is concerned, the appellant has accepted that the bank had issued wrong certificate to him which, pertained to year AY.2010-11 in place of correct year of 2009-10. Accordingly, mistake has been committed in the appellant's return of income. But the fact remains that the interest received by the appellant during the year is ₹ 3,75,573/- as against ₹ 1,96,069/- shown by the appellant in his return of income. Hence, the addition made by the AO on this account is upheld. 5. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 6. The learned AR before us contended that the difference in the income reported by the assessee is mainly arising due to the fact that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance made by the AO for ₹ 10,77,000.00 on account of interest on the loan bearing funds diverted for non-commercial purposes. 10. The AO during the assessment proceedings found that the assessee on one hand is incurring interest expenses on the borrowed fund and on the other hand the assessee has advanced money without charging any interest. Thus, the AO worked out the proportionate amount of interest of ₹ 10,77,000/- on such interest free loans and advances and added to the total income of the assessee. 11. Aggrieved assessee preferred an appeal to the learned CIT (A) who allowed the ground of appeal of the assessee in part by observing as under: 5.3. I have considered the facts of the case, the submission of the appellant and the AO's observations. The appellant in its grounds of appeal has himself stated that his books of accounts not only represent business figures, but also merged persona! transaction which has absolutely no relevant with the business. Under such circumstances, onus is on the appellant to show that the interest free loans and advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow in the earlier years in the assessment framed under section 143(3) of the Act. It implies that it has already been accepted by the revenue that such loans and advances were given in the course of the business and therefore no disallowance can be made. The learned AR in support of his contention before us has filed the copy of the assessment order pertaining to the assessment year 2008-09 and 2009- 10 which is available on record. 13.1 Likewise the learned AR, contended that amount of interest free loan and advances made in the year under consideration is of ₹6.25 lakhs which was extended out of interest free amount. As per the learned AR the interest-free fund available with the assessee is of ₹ 81,76,946/- only. The learned AR to this effect has filed the chart demonstrating the availability of interest free funds with the assessee which is available on record. 14. On the contrary the learned DR vehemently supported the order of the authorities below. 15. We have heard the rival contentions and perused the materials available on record. Admittedly, the majority of the amount was advanced as loans to the parties in the earlier years except a sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Moving ahead, we note that there was sufficient amount of fund available with the assessee to justify the interest-free loans and advances of ₹ 6.25 lakhs. As such we assume that, impugned amount of loans and advances ₹ 6.25 lakhs has been extended by the assessee out of interest free loans and advances. Therefore, no disallowance of interest qua to such loan advances is warranted. In holding so we draw support and guidance from the judgment of Hon ble Gujarat High Court in case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 where it was held as under: It was noted from records that the assessee was having shareholding funds to the extent of 2607.18 crores and the investment made by it was to the extent of`₹ 195.10 crores. In other words, the assessee had sufficient funds for making the investments and it had not used the borrowed funds for such purpose. This aspect of huge surplus funds is not disputed by the revenue which earned it the interest on bonds and dividend income. [Para 7] 15.2 In view of the above and after considering the facts of the case on hand, we hold that there cannot be any disallowance of interest expenses as alleged by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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