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TMI Blog2024 (11) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the financial year relevant to AY 2012-13. We further notice that the balance is the reserve and surplus stood at Rs. 61,60,35,571/- as on 31.03.2012. We also notice that the outstanding balance in the impugned advance account has been decreasing YoY. Therefore there is merit in the contention of the ld AR that no new advance is extended to sister concern and that the revenue did not bring anything on record to controvert the said contention. See Brindavan Beverages Pvt. Ltd [ 2016 (10) TMI 1242 - KARNATAKA HIGH COURT] . AO is not correct in making the disallowance u/s. 36(1)(iii) of the Act and direct the AO to delete the disallowance made in this regard. Decided in favour of assessee. - Shri George George K., Vice President And Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng base at Bengaluru. The assessee filed its return of income for AY 2018-19 on 30.10.2018 declaring total loss of Rs. 10,93,70,970/-. The return was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) noticed from the audited financial statements that the assessee has made advances to related concerns and no interest has been charged on the said advances. The AO further noticed that the assessee has borrowed loans from banks and other financial institutions on which interest is paid and debited to the P L Account. The AO called on the assessee to furnish details with regard to the interest free advances extended to the related concerns. The AO after considering the submissions made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 28 crores during the said financial year out of the said interest free funds (pages 113 to 115). The learned A.R. further submitted that the outstanding balance of the advance given to the sister concern has been decreasing year on year and the balance which stood at Rs. 38,47,87,979/- as on 31.03.2012 is reduced to Rs. 22,54,25,309/- for the year ended 31.03.2018. Therefore the learned A.R. submitted that the disallowance u/s. 36(1)(iii) made in the year under consideration on the ground that sufficient own funds were not available is not tenable. 6. The learned D.R. on the other hand, vehemently argued that the assessee cannot take shelter on the ground that when the advance was extended the assessee had sufficient own funds. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,87,979/- as on 01.04.2011 and the assessee had given an advance of Rs. 28 crores during the financial year relevant to AY 2012-13. We further notice that the balance is the reserve and surplus stood at Rs. 61,60,35,571/- as on 31.03.2012. We also notice that the outstanding balance in the impugned advance account has been decreasing YoY. Therefore there is merit in the contention of the ld AR that no new advance is extended to sister concern and that the revenue did not bring anything on record to controvert the said contention. In this regard we notice that a similar issue has been considered by the Hon'ble Karnataka High Court in the case of CIT vs. Brindavan Beverages Pvt. Ltd. (ITA No. 67 of 2015 dated 26.10.2016) where it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,55,67,53,078 1,64,44,19,727 87666649 There cannot be any dispute that at least share capital and reserves are own funds of the assessee. The position of the loans and advances as on 31.03.2008 and 31.03.2009 were as under; 31.03.2008 31.03 2009 Increase/Decrease Rs. Rs. Rs. Loans/advances to Directors Sister Concern 26,17,61,903 19,26,50,342 (6,91,11,561) Thus not only has assessee own funds, well covering the loans and advances, but in the previous year the advances had gone down. In none of the earlier assessment year viz. by 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 2008-09 were any disallowance for interest on loans for non-business purpose made. 23. As for the decision of the Hon ble P H High Court in Abhishek Industries Ltd., (su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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