M/s. Nimbkar Seeds Pvt. Ltd., Pune V. Dy. Comm. of Income-tax, Pune

ITA 1458/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72411 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Source of fund; Proportionate interest; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1458/PN/2011 (ASSTT.YEAR : 2007-08) M/S. NIMBKAR SEEDS PVT. LTD., 103, MEGH APARTMENTS, S.NO.39/33, ERANDAWANE, PUNE - 411004 .. APPELLANT PAN NO.AAACN6451H VS. DCIT, CIRCLE-2, PUNE .. RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY : SHRI P.L. PATHADE DATE OF HEARING : 28-11-2013 DATE OF PRONOUNCEMENT : 29-11-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 10-08-2011 OF THE CIT(A)-II, PUNE RELATING TO ASSES SMENT YEAR 2007-08. 2. DISALLOWANCE OF INTEREST OF RS.20,49,289/- BY TH E ASSESSING OFFICER AND UPHELD BY THE CIT(A) IS THE ONLY ISSUE IN THE G ROUNDS OF APPEAL BY THE ASSESSEE. 3. THIS APPEAL WAS EARLIER DISMISSED BY THE TRIBUNA L FOR NON- APPEARANCE. THE TRIBUNAL VIDE ORDER DATED 16-09-20 13 RECALLED ITS EARLIER ORDER. HENCE, THIS IS A RECALLED MATTER. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE FIELD OF MANUFACTURING OF SEEDS, DEALER IN A GRICULTURAL/FARM RELATED AUTOMOBILES AND ACCESSORIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS 2 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS B ORROWED INTEREST BEARING FUNDS FROM BANKS AND FINANCIAL INSTITUTIONS AND THE BALANCE AT THE END OF THE YEAR WAS AS UNDER : A. CASH CREDIT LOAN RS.1,08,98,155/- B. TERM LOAN RS. 93,72,248/- 4.1 FROM THE PROFIT AND LOSS ACCOUNT THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS PAID INTEREST OF RS.20,50,254/-. HE F URTHER NOTED THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES OF RS.1,7 0,77,411/- TO DIFFERENT SISTER CONCERNS WHICH ARE AS UNDER: THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSE E TO EXPLAIN AS TO WHY THE ABOVE SHOULD NOT BE CONSIDERED AS DIVERSION OF BORROWED FUNDS FOR NON- BUSINESS PURPOSES AND WHY PROPORTIONATE DISALLOWANC E OF INTEREST SHOULD NOT BE MADE. IT WAS EXPLAINED THAT THE AMOUNT OUTS TANDING FROM M/S. PHALTAN INDUSTRIES PVT. LTD. ( IN SHORT PIPL) IS DUE DURING THE NORMAL COURSE OF BUSINESS SINCE THE SAME IS A SUBSIDIARY C OMPANY WHICH IS IN LOSSES AND THE AMOUNT IS BLOCKED WITH THAT COMPANY. SO FAR AS AMOUNT ADVANCED TO M/S. NIRA VALLY GENETIC PVT. LTD. ( IN SHORT NVGPL) IS CONCERNED, IT WAS SUBMITTED THAT THE SAID COMPANY I S ENGAGED IN GOAT FARMING AND THE ASSESSEE COMPANY HAS ALSO STARTED A CTIVITY OF GOAT FARMING DURING THE PERIOD UNDER CONSIDERATION. IT WAS SUBM ITTED THAT MONEY HAS NOT BEEN GIVEN TO DIRECTORS OR SHAREHOLDERS AS ADVANCES FOR THEIR PERSONAL BENEFIT AND THE BORROWED FUNDS HAVE BEEN UTILISED F OR THE PURPOSE OF BUSINESS BY THE SISTER CONCERNS. IT WAS FURTHER SU BMITTED THAT DURING THE PARTICULARS AMOUNT OUTSTANDING AS ON 31-03-2007 NIRA VALLY GENETIC PVT. LTD. 11,18,589 PHALTAN INDUSTRIES PVT. LTD. 1,59,58,822 1,70,77,411 3 COURSE OF BUSINESS IT IS DIFFICULT TO ASCERTAIN WHI CH SOURCE OF FUNDS HAVE BEEN UTILISED FOR WHICH OBJECT. SO IT CAN ALSO BE ARGUED THAT THE AMOUNT ADVANCED TO SISTER CONCERN/SUBSIDIARY COMPANY IS OU T OF ACCUMULATED PROFITS AND SHARE CAPITAL. THE ASSESSEE HAS ALSO RE LIED ON THE FOLLOWING DECISIONS : 1. S.A. BUILDERS LTD. VS. CIT(A), CHANDIGARH [2007] 158 TAXMANN 74 (SC) 2. CIT VS. RADICO KHALITAN LTD. [2005] 142 TAXMANN 681/274 ITR 354 (ALL) 3. CIT VS. SOUGHT INDIA CORPORATION (AGENCIES) LTD. [2007] 293 ITR 237 (MADRAS) 5. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE AND THE SUBSIDIARY COMPANY ARE DIFFERENT PERSONS, HAVE DIFF ERENT IDENTITY AND ARE ASSESSED SEPARATELY FOR THEIR PROFIT AND LOSS ACCOU NT EARNED. THE ASSESSEE COULD NOT ESTABLISH DIRECT BUSINESS NEXUS BETWEEN T HE ADVANCES GIVEN AND ITS BUSINESS INTEREST SERVED. THE ASSESSEE ALSO CO ULD NOT PROVE THAT THE FINANCIAL COST BORNE BY THE ASSESSEE DURING THE YEA R BECAUSE OF DIVERSION OF BORROWED FUNDS HAS IN ANY WAY RECOVERED BY DISCOUN TED PURCHASES, IF ANY. SINCE THE COMPANY HAS PAID INTEREST ON BORROWED FUN DS WHEREAS NO INTEREST HAS BEEN CHARGED ON FUNDS ADVANCED TO SISTER CONCER NS, THEREFORE, THE TAXABLE PROFIT OF THE ASSESSEE COMPANY HAS BEEN RED UCED AND THERE IS LOSS TO REVENUE TO THAT EXTENT. RELYING ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT-I, LUDHIANA V S. M/S. ABHISHEK INDUSTRIES LTD. VIDE ITA NO.110/2005 ORDER DATED 04 -08-2006 THE ASSESSING OFFICER DISALLOWED INTEREST OF RS.20,49,2 89/- BEING INTEREST @12% ON THE CLOSING BALANCE. 4 6. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ADVANCE TO PIPL WAS GIVEN OUT OF THE EQUITY CAPITAL OR PAST SAVINGS FROM TIME TO TIME. THE CASH CREDIT ACCOUNT OF COMPANY SHOWS DEBIT BALANCES DURING JUNE 2006. THE SUBSIDIARY COMPANY IS A LOSS MAKING DEFUNCT COMPANY AND THERE IS NO DIVERSION OF FUNDS FROM THE SUBSIDIARY COMPANY TO A NY OF THE DIRECTORS/SHAREHOLDERS OR FIRMS IN WHICH DIRECTORS OR SHAREHOLDERS ARE INTERESTED. IT WAS SUBMITTED THAT THE AMOUNT ADVAN CED TO PIPL IS TO BE TREATED AS ADVANCE IN THE NORMAL COURSE OF BUSINESS . IT WAS ALSO SUBMITTED THAT THE HOLDING COMPANY IS A WELL KNOWN NAME IN TH E PHALTAN AREA, THEREFORE, TO HELP THE SUBSIDIARY COMPANY, I.E. PIP L BY WAY OF ADVANCE TO MEET OUT ITS VARIOUS LIABILITIES WAS NECESSARY FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY. THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS VS. CIT REPORTED IN 288 ITR 1 AND THE DECISION OF HONBLE DELHI HIGH COURT IN TH E CASE OF DALMIA CEMENT (BHARAT) LTD. REPORTED IN 330 ITR 595. SO F AR AS THE ADVANCE GIVEN TO NVGPL IT WAS SUBMITTED THAT THE COMPANY REGULARL Y PURCHASED GOATS FROM NVGPL AND THEREFORE THE TRANSACTIONS ARE COMME RCIAL TRANSACTIONS. IT WAS FURTHER SUBMITTED THAT THE ACCOUNT OF NVGPL IS SHOWING POSITIVE BALANCE IN THE NEXT YEAR AS THE GOATS ARE PURCHASED FROM THEM. IT WAS ACCORDINGLY SUBMITTED THAT NO DISALLOWANCE OF INTER EST SHOULD BE MADE. 7. HOWEVER, THE LD.CIT(A) WAS ALSO NOT CONVINCED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THA T THE ASSESSEE IN THE INSTANT CASE HAS NOT EXPLAINED AND DEMONSTRATED THE INTEREST AND COMMERCIAL EXPEDIENCY FOR ADVANCING INTEREST FROM L OANS TO THE SISTER CONCERNS. EXCEPT FOR THE FACT THAT THE BUSINESS OF ONE OF TWO SISTER CONCERNS WAS COMPLEMENTARY BUSINESS, THAT DOES NOT MEAN THAT THERE WAS AN ELEMENT 5 OF COMMERCIAL EXPEDIENCY INVOLVED IN THE TRANSACTIO N. THE ASSESSEE HAS NOT EXPLAINED AS TO HOW THE SISTER CONCERN HAS UTIL ISED THE MONEY FOR THE BENEFIT OF THE ASSESSEE. THE ASSESSEE HAS NOT BEEN ABLE TO BRING ON RECORD THAT NON-INTEREST BEARING FUNDS HAVE BEEN UTILISED TO GIVE THE INTEREST FREE ADVANCES. THE ASSESSEE ALSO HAS NOT BEEN ABLE TO E STABLISH THE PURPOSE FOR WHICH THE SAID FUNDS HAVE BEEN ADVANCED. HE OBSERV ED FROM THE EXPLANATION FURNISHED BEFORE THE ASSESSING OFFICER THAT NO INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSEE FOR GIVING S UCH INTEREST FREE ADVANCES. DISTINGUISHING THE VARIOUS DECISIONS CIT ED BEFORE HIM AND RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS STEEL INDUSTRIES VS. CIT REPORTED IN 324 ITR 396 HE UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 7.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCE OF RS.1,59,58,822/- TO PIPL, A SUBSIDIARY COMPANY TO PROTECT ITS GOODWILL SINCE THE COMPANY P IPL WAS A LOSS MAKING DEFUNCT COMPANY AND THE CREDITORS WERE DEMANDING TH EIR AMOUNTS. 8.1 SO FAR AS THE AMOUNT ADVANCED TO NVGPL IS CONCE RNED HE SUBMITTED THAT THE SAME WAS PURELY A COMMERCIAL TRANSACTION S INCE THE SAID COMPANY WAS ENGAGED IN GOAT FARMING & REARING BUSINESS AND THE ASSESSEE HAS PURCHASED GOATS FROM THE SAID COMPANY IN THE SUBSEQ UENT YEAR AND THE AMOUNT HAS BEEN ADJUSTED. HE SUBMITTED THAT THE TE RM LOAN WAS AVAILED DURING A.Y. 2004-05 AND HAS BEEN UTILISED FOR CONST RUCTION OF BUILDING AND PURCHASE OF OTHER ASSETS. THE BANK IS ALSO MONITOR ING THE UTILISATION OF TERM 6 LOAN AND THEREFORE THERE CANNOT BE ANY DIVERSION OF TERM LOAN TOWARDS INTEREST FREE ADVANCE TO SISTER CONCERNS. FURTHER, THE TERM LOAN IS BEING REGULARLY REPAID AND THE BALANCE HAS GONE DOWN. 8.2 SO FAR AS THE CASH CREDIT ACCOUNT IS CONCERNED, HE SUBMITTED THAT THE CASH CREDIT ACCOUNT WAS FULLY DISCHARGED DURING JUN E 2006 AND SUBSEQUENTLY IT HAS GONE UP. HE SUBMITTED THAT THE COMPANY IS MAINTAINING COMMON BANK ACCOUNT IN WHICH THE LOAN FUNDS AS WELL AS SALE PROCEEDS HAVE BEEN CREDITED AND FROM THE SAME THE INTEREST F REE ADVANCES HAVE BEEN GIVEN TO THE SISTER CONCERNS. HE SUBMITTED THAT NO DISALLOWANCE HAS BEEN MADE BY THE REVENUE AUTHORITIES IN THE PAST. 8.3 REFERRING TO THE COPY OF THE BALANCE SHEET HE S UBMITTED THAT THE SHARE CAPITAL AND RESERVES AND SURPLUS AS ON 31-03-2006 W AS RS.1.82 CRORES AND THE SAME HAS GONE DOWN TO RS.1.79 CRORES DURING 31- 03-2007. HE SUBMITTED THAT THE OWN CAPITAL AND RESERVE FUND OF THE ASSESSEE COMPANY ALONG WITH THE SUNDRY CREDITORS IS MORE THAN SUFFIC IENT TO TAKE CARE OF THE INTEREST FREE ADVANCES GIVEN TO THE SISTER CONCERNS . REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 HE SUBMITTED THAT WHEN THE ASSESSEE POSSESSED SUFFICIENT INTEREST FREE FUNDS O F ITS OWN WHICH WERE GENERATED IN THE COURSE OF THE RELEVANT FINANCIAL Y EAR APART FROM SUBSTANTIAL SHAREHOLDERS FUNDS, PRESUMPTION STANDS ESTABLISHED THAT THE INVESTMENTS IN SISTER CONCERNS WERE MADE BY THE ASSESSEE OUT OF IN TEREST FREE FUNDS AND THEREFORE NO PART OF INTEREST ON BORROWINGS CAN BE DISALLOWED ON THE BASIS THAT THE INVESTMENTS WERE MADE OUT OF INTEREST BEAR ING FUNDS. HE ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. SRIDEV ENTE RPRISES REPORTED IN 192 ITR 165 7 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE ASSESSEE HAS NOT PROVED THE COMMERCIAL EXPEDIENCY FOR GIVING INTERES T FREE ADVANCES TO SISTER CONCERNS. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING O FFICER DISALLOWED PROPORTIONATE INTEREST OF RS.20,49,289/- ON THE GRO UND THAT ASSESSEE HAS DIVERTED INTEREST BEARING FUNDS TO SISTER CONCERNS FREE OF INTEREST. WE FIND THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OF FICER ON THE GROUND THAT THE ASSESSEE COULD NOT PROVE THE NECESSITY OF COMME RCIAL EXPEDIENCY FOR ADVANCING INTEREST FREE LOANS TO THE SISTER CONCERN S AND HE HAS NOT EXPLAINED AS TO HOW THE ADVANCE GIVEN TO SISTER CONCERNS HAS BEEN UTILISED BY THEM FOR THE BENEFIT OF THE ASSESSEE. THE ASSESSEE HAS NOT ESTABLISHED THE PURPOSE FOR WHICH THE SAID FUNDS HAVE BEEN ADVANCED. 10.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT IT HAS SUFFICIENT INTEREST FREE FUNDS TO ADVANCE THE INTER EST FREE FUNDS TO THE SISTER CONCERNS, THAT THE ADVANCES TO PIPL WAS FOR PROTECT ING THE GOODWILL OF THE ASSESSEE COMPANY SINCE THE SAID COMPANY WAS A LOSS MAKING DEFUNCT COMPANY AND THE AMOUNT WAS PAID TO IT FOR MEETING T HE LIABILITY TOWARDS CREDITORS. FURTHER, THE AMOUNT ADVANCED TO NVGPL H AS BEEN SQUARED UP IN THE SUBSEQUENT YEAR BY PURCHASE OF GOATS FROM THE S AID COMPANY. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TERM LOAN HAS BEEN UTILISED TOWARDS CONSTRUCTION OF BUILDING AND ACQUISITION OF OTHER 8 ASSETS FOR WHICH IT WAS GIVEN AND THE AMOUNT IS BEI NG REGULARLY REPAID AND THEREFORE THERE IS NO QUESTION OF DIVERSION OF ANY AMOUNTS OUT OF THE TERM LOAN. IT IS ALSO THE SUBMISSION OF THE LD. COUNS EL FOR THE ASSESSEE THAT THE CASH CREDIT ACCOUNT HAD BEEN SQUARED UP IN THE MONT H OF JUNE 2006 AND IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF RELIANCE UTILITIES AND POWER LTD. (SUPRA) NO DISALLOWANCE CA N BE MADE IN VIEW OF SUFFICIENT OWN CAPITAL AND RESERVE FUNDS. 10.2 WE FIND SOME FORCE IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TERM LOAN WHICH HAS BEEN SANCTION ED FOR CONSTRUCTION OF BUILDING AND PURCHASE OF FIXED ASSETS COULD NOT BE DIVERTED FOR INTEREST FREE ADVANCES TO THE SISTER CONCERNS. IT IS COMMON KNOW LEDGE THAT TERM LOAN IS GRANTED FOR A SPECIFIC PURPOSE AND THE ASSESSEE HAD TO PRODUCE DOCUMENTS BEFORE THE BANK TOWARDS ITS PROPER UTILISATION. TH E HUGE INVESTMENT IN FIXED ASSETS ALSO SUPPORT THE ARGUMENTS OF THE LD. COUNSE L FOR THE ASSESSEE. WE, THEREFORE, ARE OF THE OPINION THAT THE ASSESSING OF FICER IS NOT JUSTIFIED IN DISALLOWING PROPORTIONATE INTEREST ON ACCOUNT OF TH E TERM LOAN AVAILED. 10.3 SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT HAS SUFFICIENT INTEREST FREE FUNDS, I.E. SHARE CAPITAL AND RESERVES AND SURPLUS WE DO NOT FIND MERIT IN THE SAME. FROM THE COPY OF TH E BALANCE SHEET, WE FIND AS AGAINST SHARE CAPITAL AND FREE RESERVES OF RS.1. 82 CRORES AT THE BEGINNING OF THE YEAR THE FIXED ASSETS ITSELF WAS RS.3.40 CRO RES. THEREFORE, THE ENTIRE SHARE CAPITAL AND FREE RESERVES HAVE BEEN UTILISED TOWARDS ACQUISITION OF THE FIXED ASSETS. APART FROM THE ABOVE, WE FIND THE AS SESSEE HAD SHOWN INVESTMENT OF RS.85.33 LAKHS AND INVENTORY OF RS.27 .42 LAKHS AT THE BEGINNING OF THE YEAR. THEREFORE, THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT HAS SUFFICIENT INTEREST FREE FUNDS AND THEREFORE IN VIEW OF THE 9 DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F RELIANCE UTILITIES AND POWER LTD. (SUPRA) NO DISALLOWANCE SHOULD BE MA DE CANNOT BE ACCEPTED. FURTHER, THE ASSESSEE HAS NOT PROVED THE NATURE OF COMMERCIAL EXPEDIENCY AS TO HOW THE MONEY HAS BEEN UTILISED BY THE SAID COMPANY EXCEPT STATING THAT THE SAME HAS BEEN GIVEN TO PIPL FOR MEETING OUT ITS OBLIGATION TO THE CREDITORS. NO EVIDENCE WHATSOEVE R WAS FILED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) OR BEFOR E US. THEREFORE, THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSE SSEE CANNOT BE ACCEPTED SINCE THEY ARE DISTINGUISHABLE AND NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE. 10.4 SO FAR AS THE AMOUNT ADVANCED TO NVGPL, WE FIN D FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT IT HAS PURCHASED GOA TS FROM THE SAID COMPANY IN SUBSEQUENT YEARS. THIS FACT WAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AS WELL AS THE CIT(A). THEREFORE , WE FIND SOME SORT OF COMMERCIAL EXPEDIENCY BETWEEN THE ASSESSEE COMPANY AND NVGPL. UNDER THESE CIRCUMSTANCES, WE HOLD THAT NO DISALLOW ANCE OF INTEREST ON ACCOUNT OF INTEREST FREE ADVANCE TO NVGPL CAN BE DI SALLOWED. 10.5 CONSIDERING THE TOTALITY OF THE FACTS OF THE C ASE, WE HOLD THAT NO DISALLOWANCE OF INTEREST FREE ADVANCE TO NVGPL IS C ALLED FOR. SO FAR AS THE DISALLOWANCE OF INTEREST FREE ADVANCE TO PIPL IS CO NCERNED THE SAME HAS TO BE CALCULATED ON THE CASH CREDIT LOAN AND NOT ON AC COUNT OF TERM LOAN IN VIEW OF THE DISCUSSION MADE EARLIER. THE ASSESSING OFFICER SHALL RE- COMPUTE THE DISALLOWANCE KEEPING IN MIND THE DIRECT IONS GIVEN ABOVE. GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 10 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED PRONOUNCED IN THE OPEN COURT ON 29-11-2013. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 29 TH NOVEMBER, 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE