9911796707
TMI Blog2006 (4) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer that the assessee has taken interest-free advances of Rs. 235.40 lakhs from sister concerns and has given interest-free advances to sister concerns amounting to Rs. 423.97 lakhs. Before him, it was contended by the assessee that no interest bearing borrowed fund was used for giving interest-free advances. It was submitted that against interest-free advances given by the assessee of Rs. 423.97 lakhs, it had interest-free funds available to the tune of Rs. 767.95 lakhs including Partners' Capital and current account balances, interest-free advances from sister concerns and advance against amenities. The Assessing Officer rejected this explanation of the assessee and disallowed Rs. 33.94 lakhs out of interest expenses be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. It was submitted that it was held as per this Tribunal order that since there was no fresh borrowing in the current year and no disallowance in the earlier year, it is indicated that it is accepted by the department that the borrowed funds were for business purpose and hence no disallowance in this year is justified. It was submitted that the facts are similar in this case and hence the order of learned CIT(A) should be upheld. It was also submitted that the burden is on the revenue to prove that borrowed funds were diverted as interest-free advances and since that has not been discharged, the order of learned CIT(A) should be upheld for this reason also. 5. We have considered the rival submissions and perused the materials on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexus between the interest-free advances given by the assessee and the funds received by the assessee on which interest was paid because same amount was given as interest-free advances to sister concerns on the same date on which, the amount was received by the assessee. There is no such nexus in the present case. Similarly, the Judgment in the case of V. I. Baby & Co. (supra) is also not applicable in the present case because it was held in that case that if the interest bearing fund is borrowed after giving interest-free advances, then even if fund was available at the time of giving interest-free advances, the borrowing is not for business purpose but for supplementing the cash diverted by the assessee. In the present case, there is no f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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