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TMI Blog2023 (1) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that the assessee has not filed any reply before the AO. It is also the submission of the ld.counsel for the assessee that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the AO that it has got sufficient funds to advance the amount for business exigency and therefore, no disallowance can be made under the provisions of law. We deem it proper to restore the issue to the file of the AO with a direction to examine the details already filed by the assessee vide letter and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA No. 216/Hyd/2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenses should not be disallowed. According to the AO, the assessee did not file any reply to the show-cause letter. In view of the above, the AO disallowed an amount of Rs.21,37,677/- being proportionate interest @12% on the advance of Rs.3,19,92,978/-. 4. In appeal, the ld.CIT(A) gave part relief to the assessee by observing as under:- In the instant case, the assessment was completed u/s 143(3) by disallowing interest expenditure of Rs.21 ,37,677/- on account of being interest paid on loans given to related parties and addition of Rs.5,97,633/- received towards duty drawback. With regard to duty drawback, the appellant stated that no duty drawback has been received on the export sales in the current financial year and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owings which it has failed to do so. Further, in the case laws relied upon, there is no blanket allowance of interest just because it is advanced to a sister concern, the appellant has to justify the business exigency and the business purpose for the same, This is not a disallowance u/s 14A for it to be invoked to the extent of exempt income asper judicial decisions, this being a dis allowance u/s 36(1)(iii) both the nexus of advance with free reserves through a bank merit and not a summary of affairs and the business exigency needs to established. The appellant docs not wish to file any evidences in support of contentions but for merely making statements. Further, the appellant in its submission has requested to dispose the appeal based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. 6. The ld.counsel for the assessee drew the attention of the Bench to the reply given by the assessee on 25.05.2021, which was uploaded. He submitted that despite the detailed reply given by the assessee, the AO stated that assessee has not filed any reply and the ld.CIT(A) also without going through the submissions made before the AO gave only part relief to the assessee. He submitted that since the assessee had given full details before the AO, therefore, the submissions of the assessee should be considered and the proportionate disallowance of interest should be deleted. In his alternate contention, the ld.counsel for the assessee submitted that the matter may be restored to the file of the AO for adjudication of the issue af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is in a position to substantiate with evidence to the satisfaction of the AO that it has got sufficient funds to advance the amount for business exigency and therefore, no disallowance can be made under the provisions of law. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to examine the details already filed by the assessee vide letter dated 28.05.2021 and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly, the grounds raised by the assessee are accordingly allowed for statistical purposes. 9. In the result, the appeal filed by the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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