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TMI Blog2024 (2) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Tribunal and the Arbitration Tribunal decided the quarrel in favour of M/s Bhayana Builders Pvt Ltd. Thereafter, the assessee carried the matter to the Hon'ble High Court [ 2017 (8) TMI 1720 - DELHI HIGH COURT] directed the assessee to return the money along with interest @ 6%. This interest has been claimed by the assessee, which has been disallowed by the AO. On the given facts, we do not find any reason/merit in the disallowance as the same has been paid as per the directions of the Hon'ble High Court. The ld. CIT(A) has rightly deleted the same and thus, calls for no interference. Interest paid to M/s Logix Infrabuild Pvt Ltd - There is no denying that the said advance was given for the acquisition of land in furtherance of the objects of the assessee s business. There is also no denying that both the assessee and M/s Logix Infrabuild Pvt Ltd. were engaged in the development of real estate projects. These undisputed facts go on to show that the impugned advance was purely a business advance and by no stretch of imagination it can be considered that the assessee has transferred borrowed funds as interest free advances - no merit in the disallowance made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection were heard together, they are disposed of by this common order for the sake of convenience and brevity. 3. Grievances of the Revenue read as under: 1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of Rs. 1,64,33,2011 under the head' Delay in security charge on loan' when loan itself was not utilized for business purpose and was given to its sister concerns without any basis, moreover, it is a capital expenditure. 2. On the facts and in the circumstances of the case and in law CIT(A) has erred in deleting the addition of 36(1)(iii) by holding that the amount was paid to Bhayana Builders on account of retention money on the direction of Hon'ble High Court when no opportunity was provided to the AO under the provisions of section 46A of the Act to confront these evidences submitted during appellate proceedings. 3. On the facts and in the circumstances of the case and in law, CIT(A) has erred in deleting the disallowance of Rs. 23,92,13,830/ u/s 36(1)(iii) when the assessee failed to brought on record any income from the loan advanced to M/s Logix Infrabuild (P) Ltd. even in the succeeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed and disallowed the same. 9. The assessee challenged the same before the ld. CIT(A) and once again explained that since the Noida authority has approved the mortgage in favour of M/s India Bulls Housing Finance Ltd, therefore, any expenditure incurred in putting/creating equitable mortgage of these properties is an allowable expenditure. 10. It was further explained that during the year, the assessee has taken loan of Rs. 112.5 crores and 234 crores from India Bulls Housing Finance Ltd. Further, letter from Noida for granting approval for mortgage was also filed. 11. After considering the facts and submissions and considering the documentary evidences, the ld. CIT(A) was convinced that the impugned expenditure of Rs. 1,64,33,201/- has been made by the assessee wholly and exclusively for the purpose of business and allowed the same. 12. Before us, the ld. DR strongly supported the findings of the Assessing Officer and read the operative part. 13. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 14. We have carefully perused the findings of the ld. CIT(A). We find that the ld. CIT(A) has deleted the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has given interest free advance out of borrowed funds and went on to disallow proportionate interest expenditure. 22. There is no denying that the said advance was given for the acquisition of land in furtherance of the objects of the assessee s business. There is also no denying that both the assessee and M/s Logix Infrabuild Pvt Ltd. were engaged in the development of real estate projects. It is also an admitted fact that M/s Logix Infrabuild Pvt Ltd. was allotted land measuring 406109.44 sq. mtrs situated in Plot No. TS-1B, Sector 22D, Yamuna Expressway Industrial Development Area, District Gautam Buddh Nagar, U.P. vide lease dated 26.11.2012 wherein the assessee has been shown as Special Purpose Company of M/s Logix Infrabuild Pvt Ltd. 23. These undisputed facts go on to show that the impugned advance was purely a business advance and by no stretch of imagination it can be considered that the assessee has transferred borrowed funds as interest free advances. 24. Considering the facts of the case in totality, we do not find any merit in the disallowance made by the Assessing Officer. The ld. CIT(A) has rightly deleted the addition which calls for no inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference is not an allowable expenditure. 33. Before the ld. CIT(A), it was strongly contended that the assessee had taken loan from IndusInd Bank and it was agreed that the assessee would hedge the said loan obtained in foreign currency at all time. And in pursuance to such agreement, the assessee into six full currency swap on various dated in F.Y 2015-16 to F.Y. 2016-17 which were to be matured in F.Y. 2018-19, 2019-20 and F.Y. 2020-21. 34. The assessee further explained that it could not continue these deals which resulted into termination of such swap cross currency agreement. It support of its contention, supporting evidences were filed. It was explained that prior to termination of such agreements, the assessee had suffered forex loss though the assessee had also earned forex gain on outstanding amount as on 20.04.2017 and from the gain, loss was set off. 35. After considering the facts and submissions, the ld. CIT(A) analyzed the facts as under: From perusal of the documents submitted by the appellant, it is also found that the impugned termination fees of Rs. 18,32,56,782/- was paid by the appellant to IndusInd Bank. Also, the assessee earned foreign exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of Rs. 25,16,24,782/- made by the Assessing Officer u/s 36(1)(iii) of the Act to the extent of Rs. 13.86 lakhs on account of advance of Rs. 1.15 crore outstanding from Shri Vkram Nath. 43. The underlying facts in this issue are that the assessee had given advance to Shri Vkram Nath in earlier years and no such advance was given during the year under consideration. In fact, the assessee had given money to M/s Unibros Manufacturing Co. Pvt Ltd on 01.04.2014 on account of commission and brokerage expenses on which TDS was deducted. 44. Since no proper services were provided by Unibros Manufacturing Co. Pvt Ltd, the assessee claimed money from Unibros Manufacturing Co. Pvt Ltd and through journal entry, the same amount recoverable from M/s Unibros Manufacturing Co, Pvt Ltd was transferred to the account of Shri Vikram Nath. The Assessing Officer disallowed proportionate interest which was confirmed by the ld. CIT(A) holding that the assessee failed to establish any link of such advance with the business of the assessee. 45. After carefully considering the orders of the authorities below, we find that the undisputed fact is that the said money was given in F.Y. 2014-15 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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