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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 ..... e opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in upholding the disallowance made u/s. 36[1][iii] of the Act of Rs. 2,56,98,485/- without appreciating that the appellant had sufficient non-interest bearing funds for making the advance to M/s. Deccan Emerging Cargo Ventures, a group entity, which advance was given for the purpose of business of the appellant in the earlier years and therefore, the disallowance made ought to have been deleted. 3. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance was extended, the assessee had sufficient interest free funds out of which the advances were extended. The assessee submitted the financial statements for AY 2012-13 and other relevant details to submit that the balance in the impugned advance account have since been decreasing and no new advance was extended during the year under consideration. Accordingly, the assessee submitted that no disallowance u/s. 36(1)(iii) is warranted. The CIT(A) did not accept the submissions of the assessee and upheld the disallowance made by the AO stating that during the year under consideration the assessee did not have sufficient interest free funds. Aggrieved, assessee is in appeal before the Tribunal. 5. The learned A.R. reiterated the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly the ld DR supported the order of the AO in making the disallowance u/s. 36(1)(iii) of the Act. 7. We have heard the rival contentions and perused the material on record. The assessee in the financial statements for the year under consideration has shown a sum of Rs. 22,54,25,309/- as advance to related parties. Since the reserves and surplus of the assessee was less than the advance given to related parties, the AO made a disallowance u/s. 36(1)(iii) of the Act. The assessee contended that the advance was not given during the year under consideration and that the balance shown is the outstanding carried forward from earlier years. The assessee is also contending that no advance was given during the year under consideration make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is entitled to deduction of interest on loans when assessee has extended interest free loans to directors & sister concerns and when assessee has failed to establish the nexus between the interest free funds available with it and non-interest bearing advances/loans recorded perverse finding ?" 4. We permit the learned Advocate to amend the memo of appeal by raising the aforesaid question. 5. As the learned Advocate has restricted the present appeal only on the new question formulated and as question Nos.1 and 2 are not pressed, we find that only aspect to be considered is newly added question. The relevant discussion of the Tribunal on the aforesaid question is at paragraph Nos.22 and 23 which reads as under :- "22. We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon'ble Mumbai High Court in the case of Reliance Utilities & Power Ltd., (supra) as well as Hon'ble Gujarat High Court in the case of Raghuvir Synthetics Ltd.,(supra). We thus. do not find any reason to interfere with the order of the CIT (A) in this regard. In the result ground 4 of the revenue is dismissed." 6. The aforesaid discussion shows that the Tribunal has found that the decision upon which reliance has been placed by the Revenue in the case of PUNJAB AND HARYANA HIGH COURT IN ABHISHEK INDUSTRIES LTD., i3 already reversed by the Apex Court in the case of MUNILAL SALES CORPN. VS. CIT 298 ITR 283 and further the Tribunal has also found that the stand of the assessee is supported by the decision of MUMBAI HIGH COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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