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TMI Blog2018 (3) TMI 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has concluded that the assessee having adequate non-interest bearing funds, it can be inferred that the loan given has no bearing on the interest expense claimed by assessee on borrowed funds. In absence of rebuttal of above stated material finding given by Ld.CIT(A) on the issue even before the Tribunal, we do not find reason to interfere with the first appellate order, which is comprehensive and reasoned one as well as supported by the ratio laid down in the above cited decisions Decided in favour of assessee. Addition being loan amount written off given to sister concern - AO disallowed alleged amount as the said amount written off was not taken as income in any preceding year, assessee is not in the business of giving loans, and that, conditions laid down in section 36(2) of the Act were not fulfilled - HELD THAT:- In the present case the write off of loss has not arisen during the course of business of assessee as money lending is not the activity that is carried on by assessee and it has never been the claim of assessee nor it has been proved before the authorities below. There has been no evidence that is placed on record to prove that the loss has occurred during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, the Ld. CIT (A) is legally justified in deleting the disallowance of Rs. 57,19,974/- on account of write off loan to sister concern ignoring the fact that no amount corresponding to bad debts was booked as revenue in earlier years in accordance with provision of section 36(2) (i) of the Income Tax Act and also ignoring the fact that the assessee is not a banking company.? 5. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal. 2. Brief facts of the case are as under: Assessee is engaged in the manufacture of garments having it s factory at Gurgaon. It filed its return of income for the year under consideration on 27/09/12 declaring total income of Rs. 12,64,20,520/-. The assessment was completed under section 143 (3) by computing the taxable income in the hands of assessee at Rs. 13,80,54,080/-. Ld. AO while completing assessment made following disallowances: 1. Disallowance u/s 14A Rs. 2,23,000/- 2. Disallowance of interest on account of interest free loan given to sist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of Rs. 30.93 lacs from the claim of interest by the assessee u/s 36(1)(iii) on the ground that the assessee has diverted its interest bearing funds to its related person and accordingly interest @ 10.75% on interest free loans is disallowed. d. The following undisputed facts emerge: The advance/loan were given by the assessee to a company COED, which was formed to promote its business in India. 2. The assessee company had 50% stake in the said company COED, with the balance 50% held by CBPL. 3. Loan/Advance of Rs. 285.99 lacs was given by the assessee. Similarly, Loan/advance of Rs 292.34 lacs were given by the other joint venture partner i.e CBPL, till March 31, 2012. 4. The loan was given to set up an infrastructure for starting a new line of business. 5. As a result of the advances given by the assessee and CBPL, COED was able to achieve a Sales Turnover of Rs. 190.82 lacs during the Financial year 2009-10; Turnover of Rs 28.94 lacs in Financial Year 2010-11 and a Turnover of Rs 4.85 lacs in Financial Year 2011-12. The loan advance outstanding in the books of the assessee is a part of current assets of the assessee company. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my predecessors had allowed the appeal, I hold that the loan was given for commercial expediency and allow the appeal. Accordingly, the disallowance of Rs. 30,93,336/- is deleted. 3.8. Further on perusal of the decision of this Tribunal in assessee s own case for assessment year 2009-10 and 2010-11 (supra) it is observed that the issue has been decided as under: 6.1. Considering the above submission, we find that the Ld.CIT(A) has deleted the disallowance on the basis that nexus between interest bearing funds and interest free advance as well as adequacy of interest free fund available with the assessee, have not been analysed by the A.O. during the assessment proceedings, nor the explanation given by assessee that the loan was given for business purpose has been rebutted by the A.O. The Ld.CIT(A) has concluded that the assessee having adequate noninterest bearing funds, it can be inferred that the loan given has no bearing on the interest expense claimed by assessee on borrowed funds. In absence of rebuttal of above stated material finding given by Ld.CIT(A) on the issue even before the Tribunal, we do not find reason to interfere with the first appellate order, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR submitted that assessee has claimed the said amount as a write off to be bad debts before Ld.AO while before Ld.CIT (A) the said amount has been claimed as business loss. He also submitted that assessee is not in the business of advancing loans. Ld.DR further submitted that the said amount cannot be considered differently before different authorities by assessee. He thus placed reliance upon order of Ld.AO, and submitted that assessee has failed to comply with conditions laid down in section 36 (2). 4.4. At the outset Ld.AR submitted that assessee company advanced loan to its sister concern, which is evident from financial statements of the sister concern. Further it is submitted that the sister concern has accumulated huge losses in the preceding financial years and net worth of sister concern has fully eroded. 4.5. He submitted that it was under the circumstances that the assessee had written off the loan advanced to sister concern, which is also an allowable business expenditure in the hands of assessee, as on date, sister concern to whom loans were advanced, become sick. 4.6. We have perused the submissions advanced by both the sides in the light of the records plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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