9911796707
TMI Blog2025 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ils and therefore, the contention of the A.R. that such funds were not diverted towards interest free advances appears to be justifiable from the records i.e. Tax Audit Report, Financial Statements and the evidence in support of these advances given to the related parties. Thus, the disallowance made by the AO as well as confirmed by the CIT(A) is not justifiable in light of the decision of CARGILL GLOBAL TRADING (P.) LTD. [ 2011 (2) TMI 209 - DELHI HIGH COURT] and SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2006 (12) TMI 82 - SUPREME COURT] . Thus, the appeal of the assessee is allowed. - Ms. Suchitra Kamble, Judicial Member For the Appellant : Shri Tushar Hemani, Sr. Adv. And Shri Praimalsinh B. Parmar, A.R. For the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- u/s 36(1)(iii) of the Act without understanding the facts of the case and also not going into the details of the case of the appellant and thus violated the basic principles of the natural justice. Hon ble CIT(A) in its order u/s 250 dated 08.05.2023 stated that the appellant company had given interest free loans and advances of Rs. 37,17,11,321/- and disallowed the LC discounting charges of Rs. 16,83,705/- on the belief that the same shall be disallowed as the appellant company has given huge interest free loans advances to party. Hon ble CIT(A) has not considered the fact that the loans and advances were provided in the prior years the accumulated balance of the same is huge. 4. Both the lower authorities have passed the orders withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that these advances were business advances and were also given to unrelated parties. The Ld. A.R. submitted that in such a circumstances Section 26(1)(iii) cannot be invoked in the case of business advances. The Ld. A.R. further submitted that the Assessing Officer and the CIT(A) have essentially question necessity of giving interest free advances when assessee is incurring interest expenses. The Ld. A.R. submitted that Revenue Authorities cannot decide as to how in which manner the assessee should conduct his business. The Ld. A.R. relied upon the decision of Hon ble Apex Court in case of S.A. Builders Ltd. vs. CIT 288 ITR 1 (SC). The Ld. A.R. further submitted that the LC discounting charges will not fall within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has given finding that the prudent business man will never give such interest free advances, the fact remains that these are for a purchase of material and it was for conducting the business of the assessee and therefore, the same cannot be stated as certain interest free loan / advances was not rightly disallowed by the Assessing Officer under Section 36(1)(iii) of the Act. In fact, the opening balance of these advances was submitted by the assessee in the details and therefore, the contention of the Ld. A.R. that such funds were not diverted towards interest free advances appears to be justifiable from the records i.e. Tax Audit Report, Financial Statements and the evidence in support of these advances given to the related parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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