9911796707
TMI Blog2025 (4) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... ituated in Shegaon, District Buldhana. 2. That Income Tax Commissioner of Income Tax (Appeals) Order in case of M/s Shri Gajanan Cotspin has been passed on 31/01/2023, in which the Appeal was partly allowed. 3. That my accountant who looks after day to day working of the firm did not know that a partly adverse order has been passed, due to which no Appeal was preferred within due date of 03/04/23. 4. That due to oversight and inadvertent mistake of the accountant, the Appeal is being preferred today, i.e. 27/04/2023, after a delay of 42 days. 3. After considering the submissions of the learned Authorised Representa-tive and averments made in the application seeking condonation of delay, I am of the opinion that the assessee is prevented in filing the appeal belatedly and I am satisfied that the delay in filing the appeal is due to reasonable cause. Consequently, I condone the delay of 43 days in filing the present appeal and admit the same for adjudication on merit. 4. The following grounds have been raised by the assessee:- "1. That on the facts and circumstances of the case, Ld. CIT(A) erred in confirming disallowance of interest paid of Rs. 7,63,780/- from the total ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advances to Shri Govind N. Bhattad. The opening balance shown in ledger account of this person as on 01/04/2013 is at Rs. 82,86,500 and closing as on 31/03/2014 is at Rs. 44,26,500. During the year under consideration, the assessee has repaid the amount of advances time to time. It has been further seen by the Assessing Officer that re-payment made by Shri Govind N. Bhattad, is during the period from 08/10/2013 to 31/03/2014. During the course of assessment procee-dings, the assessee has accepted that he has not charged any interest from this person against such huge amount. Further, the assessee has paid interest on the amount of loan taken from other creditors ranging between @12% and 15%. The assessee has not charged any interest against the amount given to Shri Govind N. Bhatted, however, he paid interest to other creditors @ 12 to 15%. According to rate of 12% the interest amount chargeable against advances given to Shri Govind N. Bhattad was calculated by the Assessing Officer which reads as under:- Amount (Rs.) Period of Interest (Rs.) Rate of Interest (Rs.) Interest Amount (Rs.) 82,86,500 01/04/13 to 30/09/2013 12% 4,97,190 44,26,500 01/10/13 to 31/03/14 12% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhatted out of the capital of the firm and has not given any interest to the partners. But the assessee has unable to establish nexus between the amount given to Shri G.N. Bhattad and the capital of the firm. It is also pertinent to note here that capital of the firm is utilizing non-productive investments and resulting firm has borrowed capital from other creditors after paying interest to them. Therefore, reply filed by the assessee on this issue is not acceptable. (ii) The assessee has stated that the amount given to Shri G.N. Bhatted for advances against the land taken from him on rent for factory purpose in the year 2008-09. Since the assessee himself accepted that the land taken from Shri G.N. Bhattad on rental basis and paid Rs. 7,000/- per month. Therefore there is no question arises for interest free advances given to this person for a very long period. There has no agreement made between the assessee and Shri G.N. Bhatted for charging rent lower then market rate and no interest charging by the assessee against this facility. It is clear from the fact that the assessee has unable to establish the nexus between the capital of partner and amount given to the Shri G.N. Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land was on a rental basis and rent of Rs. 7000 per month is being paid by the firm and claimed as expenditure. Therefore, reason assigned by the appellant for making interest free advance cannot be considered to be an acceptable explanation. The appellant relies upon certain legal precedents as well. Regarding the hon'ble ITAT Ahmedabad decision is concerned the factual matrix was totally different and there was a finding of fact that the advance was from funds raised in public issue and also the transaction was entered into by the amalgamating entity prior to restructure. Regarding the ITAT Bangalore decision, there was again a clear finding of fact that the funds were advanced from interest free funds. In the last case also, the relief was granted for the reason that there was no evidence of interest-bearing funds getting diverted. Therefore, no relief is possible on the basis of the above legal precedents. On the factual matrix, the appellant failed to prove a one-to-one corelation on the basis of movement in funds that the interest bearing funds were not diverted for the impugned interest free advance. Decision: Therefore, the disallowance is upheld for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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