Assistant Commissioner of Income tax, V. Prasanna Purple Mobility Solutions Pvt.Ltd, Pune

ITA 158/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6073 (ITAT-PUNE)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Proportionate interest; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.158/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE. .... / APPELLANT / V/S. PRASANNA PURPLE MOBILITY SOLUTIONS PVT. LTD. 396, SHUKRAWAR PETH, NEAR A D SCHOOL, S.P. COLLEGE, PUNE-411 030. PAN : AAACO9763H / RESPONDENT REVENUE BY : SHRI PANKAJ GARG ASSESSEE BY : SHRI NIKHIL MUTHA / DATE OF HEARING : 22.01.2019 / DATE OF PRONOUNCEMENT : 23.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF LD. CIT(APPEALS)-3, PUNE DATED 05.09.2016 FOR THE ASSESSMENT YEAR 2012-13 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ENTIRE ADDITION OF RS.91,60,470/- M ADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES U/S.36(1)(III) OF THE IT ACT, IGNORING THE FACTS THAT THE ASSESSEE HAS NOT SUBMITTED ANY DOCUM ENTARY EVIDENCE TO PROVE THAT INTEREST FREE FUNDS WERE AVAILABLE WITH IT AT THE TIME(DATE) WHEN THE AMOUNTS WERE ADVANCED TO ITS SISTER CONCER NS. 2 ITA NO.158 /PUN/2017 A.Y.2012-13 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAD ALR EADY MADE INVESTMENTS IN FIXED ASSETS, OTHER LOANS AND ADVANC ES AND CERTAIN OTHER INVESTMENTS AS EVIDENCED FROM THE BALANCE SHEET AND THUS, THE ASSESSEE WAS NOT HAVING ANY OWNED/INTEREST FREE FUNDS TO BE GIVEN AS LOAN TO ITS 3 SUBSIDIARIES AND TO A PARTNERSHIP FIRM, 'RAMJYOTI TRAVELS' TO THE EXTENT OF RS.4,78,96,456/- AND RS.1,78,35,466/- RESPECTIVE LY. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE C OMPANY FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.0 9.2012 DECLARING TOTAL INCOME AT RS. NIL. THE SAID RETURN WAS PROCESSED U/S .143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE AC T). THEREAFTER, THE ASSESSING OFFICER PASSED SCRUTINY ORDER U/S.143(3) DATED 20 .03.2015 DETERMINING TOTAL INCOME AT RS.1,10,79,163/-. IN THE ASSESSM ENT COMPLETED, THE ASSESSING OFFICER DISALLOWED INTEREST EXPENSES AMOUNT ING TO RS.9,16,470/- U/S.36(1)(III) AND CERTAIN EXPENDITURE U/S.37 OF THE ACT @2% OF THE SAID EXPENSES ON AD-HOC BASIS. 2.1 THAT THE REVENUE HAS RAISED TWO GROUNDS AND BOTH THE GROUNDS RELATE TO THE DELETION OF ADDITION ON ACCOUNT OF INTEREST EXPENSE S AMOUNTING TO RS.91,60,470/- U/S.36(1)(III) OF THE ACT. 3. DURING FIRST APPELLATE PROCEEDINGS, THE LD.CIT(APPEALS) A FTER CONSIDERING THE ASSESSMENT ORDER, FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE OBSERVED THAT ON FACTUAL PARAMETERS, THE ASSE SSEE WAS HAVING ADEQUATE INTEREST FREE FUNDS AND THEREFORE, PLACING RELIANC E ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIA NCE UTILITY AND POWER LTD. REPORTED AS 313 ITR 340 (BOM.) HAS PROVIDED RELI EF TO THE ASSESSEE. THE RELEVANT PORTION OF THE LD. CIT(APPEALS)S ORDER IS AS FOLLOWS: 3 ITA NO.158 /PUN/2017 A.Y.2012-13 5.10. DECISION :- I HAVE PERUSED THE ASSESSMENT ORDER, SUBMISSIONS MADE BY THE APPELLANT AND THE MATERIAL ON RECORD. I FIND MERIT IN THE SUBMISSION OF THE APPELLANT. IT IS SEEN THAT AO IN THE ASSESSMENT ORDER DISALLOWED THE INTEREST EXPENSES OF RS.91,60,470/- U/S.36(1)(III) OF THE ACT BY MAKING A SWEEPING COMMENTS WITHOUT EVEN EXAM INING THE NOTES GIVEN BY THE APPELLANT WITH THE ACCOUNTS. THE AO, I N PARA 4.2 OF THE ASSESSMENT ORDER, WHILE DISALLOWING THE INTEREST ON INTEREST FREE LOANS/ADVANCES GIVEN TO THE SISTER CONCERNS HELD AS UNDER: IN RESPONSE TO THE ABOVE, ASSESSEE SUBMITTED LEDGE RS OF THESE SUBSIDIARY IN THE BOOKS OF COMPANY. THE SUBMISSION OF THE ASSESSEE DULY CONSIDERED. IT CAN BE SEEN FROM SUBMI SSION THAT THE ASSESSEE COMPANY HAS NOT JUSTIFIED THE BUSINESS PUR POSE OF EXPEDIENCY OF THE AMOUNT ADVANCE. THE LOAN IS GIVEN TO ITS RELATED PARTIES. AS STATED ABOVE, THE ASSESSEE COMPANY HAS HUGE INTEREST BURDEN. SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE FUND WERE UTILIZED FOR THE PURPOSE OF THE BUSINESS OF TH E ASSESSEE, THIS SAME CALLS DISALLOWANCES OF PROPORTIONATE AMOUNT OF INTEREST. INTEREST ON BORROWED MONEY IN ALLOWED AS A DEDUCTION FROM BUSINESS, ONLY IF IT SATISFIES THE CONDITION THAT I T IS FOR THE PURPOSE OF BUSINESS OR PROFESSION. WHERE THE MONEY BORROWED WAS DIVERTED FOR GIVING INTEREST FREE LOANS TO SUBSIDIA RIES, THE PROPORTIONATE INTEREST ATTRIBUTABLE TO SUCH LOANS C OULD BE LEGITIMATELY DISALLOWED BY THE ASSESSING OFFICER. I T WAS SO HELD TO IN S A BUILDERS LTD. VS. CIT [2004] 269 ITR 535 (P & H). THE ASSESSEE IN THE PRESENT CASE HAS NOT BE ABLE TO BRI NG ANY MATERIAL ON RECORD TO INDICATE THE PURPOSE OR THE COMMERCIAL EXPEDIENCY FOR ADVANCING THE AFORESAID AMOUNT AND THE BENEFITS ACCRUING OUT OF SAID ADVANCES IS APPARENTLY NOT SHOWN TO HAVE SE RVED ANY BUSINESS PURPOSE OF THE ASSESSEE. THUS WHEN THE ASS ESSEE BORROWS MONEY FOR PURPOSES OF ADVANCING INTEREST WO ULD NOT BE ELIGIBLE DEDUCTION U/S. 36(1)(III) OF THE ACT. INTE REST ON BORROWED CAPITAL IF GIVEN AS INTEREST FREE ADVANCES WITHOUT ANY JUSTIFIABLE REASON IS LIABLE FOR DISALLOWANCES. 5.11 I FIND THAT THE AO HAD NEITHER LOOKED INTO THE APPELLANTS ACCOUNT AND ALSO THE NOTES AND COMMENTS GIVEN ALONG WITH TH E ACCOUNTS FOR ADVANCES TO GROUP COMPANIES, AS FURNISHED BEFORE HI M DURING ASSESSMENT PROCEEDINGS AND ALSO SUBSEQUENTLY BEFORE THE UNDERSIGNED VIDE PAGE NO. 83 OF THE PAPER BOOK FILED ON 26.08.2 016. IT WOULD BE WORTHWHILE TO REPRODUCE THE SAME FOR THE SAKE OF CO NVENIENCE.. NOTES ON ADVANCES TO GROUP COMPANIES PRASANNA PURPLE MOBILITY SOLUTIONS PVT. LTD. (PPMSP L) CARRIES ON BUSINESS OF OPERATING CITY BUS SERVICE UNDER ITS OW N LEGAL ENTITY AND THROUGH ITS SUBSIDIARIES AS UNDER: A) OPERATION OF CITY BUS SERVICE (UNDER BRAND NAME HOP ON HOP OFF) UNDER DELHI TOURISM THROUGH ITS SUBSIDIARY PUR PLE UMTC TRANSIT PVT. LTD. HOLDING 74% EQUITY HOLDING. B) IT ALSO HAS 100% CONTROLLING STAKE IN DAYAJIT NIMAY BUS LOGISTICS PVT. LTD. AND IN RAMAJYOTI TRAVELS, A PAR TNERSHIP FIRM IN WHICH 99% EQUITY IS OWNED BY PPMSL AND 1% BY ITS DIRECTOR MR. PRASANNA PATWARDHAN. THESE COMPANIES OPERATE CI TY BUS SERVICES IN INDORE. 4 ITA NO.158 /PUN/2017 A.Y.2012-13 C) PPMSPL OWNS 90% EQUITY IN SHREE MAHAKALESWAR TRAVEL PVT. LTD., UJJAIN WHICH OPERATES CITY BUS SERVICES IN UJ JAIN. PPMSPL HAS ADVANCED MONIES FOR THE PURPOSE OF BUSIN ESS OPERATIONS TO SUPPORT AND ENSURE CONTINUITY OF OPER ATIONS AND FULFILL ITS CONTRACTUAL OBLIGATIONS WITH THE AUTHOR ITIES AS UNDER: 1) TO PURPLE UMTC TRANSIT PVT. LTD. : NET ADVANCES DUR ING THE FINANCIAL YEAR 2011-12: RS.33882.62/-. 2) TO DAYAJIT NIMAY PVT. LTD. : NET ADVANCES DURING FY 2011- 12: RS.97,02,950/- 3) TO RJT : NET ADVANCES DURING FY 2011-12 : RS.1,66,18,456/- 4) TO SMPTPL UJJAIN : NET ADVANCES DURING FY 2011-12 : RS.21,66,574/- ALL THE ABOVE MONIES ADVANCED ARE OUT OF THE CAPITA L AND NOT OUT OF ANY BORROWINGS/DEBT CARRYING INTEREST CHARGE. 5.2 IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO DI D NOT CONSIDER THE AFORESAID SUBMISSION OF THE APPELLANT AND ALSO DID NOT EXAMINE THE ACCOUNTS VIS-A-VIS THE CONTENTION OF THE APPELLANT THAT THERE WAS SUFFICIENT INTEREST FREE SURPLUS BALANCE WITH THE A SSESSEE TO THE EXTENT OF RS.34,03,68,623/- AND ALSO THERE WAS BUSINESS EXPEDIENCY FOR ADVANCING INTEREST FREE UNSECURED LOANS TO ITS SIST ER CONCERNS AS WELL BESIDES THE FACT THAT THE LOANS AVAILED FROM VARIOU S BANKS WERE ALL FOR THE PURPOSE OF VEHICLE PURCHASE WITH FUNDS BEING DI RECTLY DISBURSED TO THE VENDORS. THE APPELLANT HAS GIVEN VARIOUS CHARTS CALCULATING AND ESTABLISHING THE FACT THAT THE LOANS WERE ADVANCED BY THE APPELLANT OUT OF ITS OWN FUNDS AND NOT BORROWED FUNDS. IT HAS SPE CIFICALLY GIVEN THE DETAILS REGARDING RESERVE AND SURPLUS AVAILABLE WIT H IT VIS-A-VIS THE INTEREST FREE ADVANCES GIVEN TO THE SUBSIDIARIES/SI STER-CONCERNS ESTABLISHING THE FACT THAT IT HAD SUFFICIENT FUNDS OF ITS OWN FROM 'WHICH THE LOANS AND ADVANCES WERE GIVEN TO THEM. THE APPE LLANT ALSO BY FURNISHING A CHART OF BORROWING FROM THE BANKS AND UTILIZATION OF THE SAME DIRECTLY FOR VEHICLE PURCHASES HAD ESTABLISHED THE FACT THAT THE BORROWED FUNDS WERE UTILIZED DIRECTLY FOR THE DISBU RSEMENT TO THE VENDORS. IT, THEREFORE, CANNOT BE SAID THAT THE APP ELLANT HAD ON BOTH THE ABOVE SCORES FAILED TO SATISFY THE CONDITIONS FOR I NVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT FOR DISALLOWANCES OF PROPORTIONATE INTEREST ON THE INTEREST FREE LOANS AND ADVANCES GIVEN TO THE S UBSIDIARIES/ SISTER CONCERNS. NONETHELESS, THE APPELLANT COULD ALSO EST ABLISH ITS CONTENTION THAT THERE 'VAS COMMERCIAL EXPEDIENCY. ON ALL THE A BOVE POINTED 3 CATEGORIES CONTENDED BY THE APPELLANT IN ITS SUBMIS SION APPARENTLY HAVE NEITHER BEEN LOOKED INTO BY THE AO, LEAST TO SAY EX AMINED. 5.13 I FIND THAT THE AO MERELY RELIED ON THE DECIS ION OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF S A BUILDER LTD. (SUPRA) WHIL E DISALLOWING PROPORTIONATE INTEREST SIMPLY STATING T HAT THE APPELLANT COULD NOT BRING ANY MATERIAL ON RECORD TO INDICATE THE PU RPOSE OR THE COMMERCIAL EXPEDIENCY FOR ADVANCING THE INTEREST FR EE LOANS AND THE BENEFITS ACCRUED OUT OF SAID ADVANCES WAS APPARENTL Y NOT SHOWN TO HAVE SERVED ANY BUSINESS PURPOSE FOR THE ASSESSEE. IT APPEARS THAT THE AO HIMSELF MADE THE OBSERVATION AS 'ADVANCES IS APPARE NTLY NOT SHOWN TO HAVE SERVED BUSINESS PURPOSE FOR THE ASSESSEE', WITHOUT EVEN CALLING FOR ANY SUCH DETAILS FROM THE APPELLANT OR WITHOUT ANY INVESTIGATION RESULTING INTO SUCH APPARENT DECISION ON HIS PART, BEREFT 5 ITA NO.158 /PUN/2017 A.Y.2012-13 OF ANY FACTUAL ANALYSIS OF THE CASE OF THE APPELLAN T, IN FACT THE HON'BLE SUPREME COURT DECISION IN THE CASE OF S A BUILDER L TD. VS. CIT (APPEAL 2007) 288 ITR 1 (SC) WHILE DECIDING THE ISS UE RELATING TO DISALLOWANCES U/S. 36(1)(III) OF THE ACT. IN THIS SAID CASE THE DISALLOWANCES OF INTEREST TO THE EXTENT OF RS.16,39 ,010/- MADE BY THE AO WAS SET-ASIDE BY THE CIT(A) HOLDING THAT THE INT EREST PAID BY THE ASSESSEE OF WHICH DEDUCTION WAS CLAIMED WAS FOR BUS INESS PURPOSES AND, THEREFORE, THE ENTIRE INTEREST PAID BY THE ASS ESSEE SHOULD HAVE BEEN ALLOWED AS BUSINESS EXPENDITURE. ON APPEAL BY THE DEPARTMENT, THE APPELLATE TRIBUNAL UPHELD THE VIEW OF THE CIT(A ), BUT THE HIGH COURT ALLOWED FURTHER APPEAL OF THE DEPARTMENT. ON SPECIAL LEAVE PETITION (SLP), THE HON'BLE SUPREME COURT HELD- 'I) IT IS MANIFEST THAT THE ADVANCE TO THE SUBSIDIARY B ECAME IMPERATIVE AS A BUSINESS EXPEDIENCY IN VIEW OF THE UNDERTAKING GIVEN TO THE FINANCIAL INSTITUTION BY T HE ASSESSEE TO THE EFFECT THAT IT WOULD PROVIDE ADDITIONAL MARGIN TO THE SUBSIDIARY TO MEET THE WORKING CAPITAL FOR MEETING ANY LOSSES. SUBSEQUENTLY, THE ASSESSEE COMPANY HAD OFF-LOADED I TS SHAREHOLDING IN THE SUBSIDIARY TO VARIOUS COMPANY A ND AT THAT TIME THE ASSESSEE COMPANY NOT ONLY REFUNDED BACK TH E ENTIRE LOAN GIVEN TO THE SUBSIDIARY BY THE ASSESSEE BUT WH ICH WAS REFUNDED WITH INTEREST. IN THE YEAR IN WHICH THE IN TEREST WAS RECEIVED, THE SAME WAS SHOWN AS INCOME AND OFFERED FOR TAX. II) SO FAR AS THE LOANS TO THE DIRECTORS ARE CONCER NED, THE ASSESSEE HAD A CREDIT BALANCE IN THE BANK ACCOUNT W HEN THE SAID ADVANCE OF RS.34,00,000/- WAS GIVEN. THE COMPA NY HAD RESERVE/SURPLUS TO THE TUNE OF ALMOST RS.15,00,00,0 00/- AND THEREFORE, THE ASSESSEE COMPANY COULD IN ANY CASE U TILIZE THOSE FUNDS FOR GIVING ADVANCES TO ITS DIRECTORS. ON THE BASIS OF THE AFORESAID DISCUSSION, THE SUPRE ME COURT ALLOWED THE APPEAL THEREBY SETTING ASIDE ORDER OF THE HIGH COUR T AND RESTORING ORDER OF THE APPELLATE TRIBUNAL WHEREIN THE APPELLATE TRI BUNAL HAD UPHELD THE DELETION ORDER OF THE INTEREST BY THE CIT(A). 5.14 I ALSO FIND THAT THE APPELLANT HAS CITED THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITY AND POWER LTD. (SUPRA) CONTENDING THAT IT HAD SUFFICIENT FUNDS AVAILABLE W ITH IT FORM WHICH INVESTMENTS IN LOAN WERE GIVEN TO THE SISTER CONCER NS. S A BUILDER LTD.'S CASE (SUPRA) HAS ALSO BEEN REFERRED TO BY THE APPEL LANT DISTINGUISHING THE SAME FROM THE FINDINGS OF THE AO. ON THE OTHER HAND THE SAME CASE HAS BEEN CITED REFERRING TO SUPREME COURT DECISION CONT ENDING THE COMMERCIAL EXPEDIENCY OF GIVING SUCH LOANS TO THE SISTER CONCE RNS FOR RUNNING OF THERE BUSINESS FOR PROMOTING THE INTEREST OF APPELLANTS B USINESS FOR THE PURPOSE OF HOP-ON AND HOP-OFF TOURIST BUSES IN DELHI TO PRO MOTE TOURISM BESIDE BUSINESS IN INDORE, UJJAIN FOR THE INTRA-CITY TRANS PORT SERVICES AS PER CONTRACT ENTERED INTO VARIOUS MUNICIPAL CORPORATION OF THE RESPECTIVE CITIES. I FIND THE APPELLANTS CONTENTION OF GIVING INTEREST FREE ADVANCES TO SISTER CONCERNS AS BASED ON COGENT REASONING. IN TH IS CONNECTION, IT WOULD BE PERTINENT TO REFER SOME OF THE DECISION WHEREIN THE HON'BLE COURTS HELD THAT PROVISIONS OF SECTION 36(1)(III) FOR DISALLOWA NCES OF INTEREST ON INTEREST FREE ADVANCES GIVEN COULD NOT BE INVOKED. THE SAME ARE GIVEN AS BELOW 1) CIT VS. NEELKANTH SYNTHETICS AND CHEMICALS P. LTD. [2011] 330 ITR 463 (BOM.) IN THIS CASE THE HON'BLE BOMBAY HIGH COURT HELD THA T WHERE THE LOAN WAS TAKEN TO REPAY THE LIABILITY OF THE SISTER CONC ERNS, INTEREST OF THE SAME IS TO BE ALLOWED ON GROUND OF COMMERCIAL EXPED IENCY. 6 ITA NO.158 /PUN/2017 A.Y.2012-13 2) CIT VS. GOM INDUSTRY LTD.[2008] 299 ITR 0042 (MP) 3) JT. CIT VS. ITC LTD. [2008] 299 ITR (AT) 341 (KOLKA TA) [SB] 4) ACIT VS. BIPIN SHEETGRAH (P) LTD. 33 DDH 006 AGRA ( TRIB.) IN THESE CASES , THE HON'BLE COURTS HELD THAT WHERE AMOUNT BORROWED WAS UTILIZED TO MAKE INTEREST FREE ADVANCE AND WHER E THE TRANSACTION WAS GENUINE AND FOR BUSINESS PURPOSES INTEREST WAS ALLOWABLE. 5) CIT VS. PREM HEAVY ENGINEERING WORKS P. LTD. [2006] 285 ITR 554 (ALL) 6) D & H SECHRON ELECTRODES PVT. LTD. VS. CIT [1983] 1 42 ITR 528 (MP) 7) CIT VS. RELIANCE UTILITIES AND POWER LTD. [2009] 31 3 ITR 340 (BOM.) IN THESE CASES, IT WAS HELD THAT WHERE THE ASSESSEE HAD ADEQUATE INTEREST FREE FUNDS BY WAY OF PROPRIETARY CAPITAL O R BY WAY OF INTEREST FREE DEPOSIT FOR CUSTOMERS, THERE IS AN INFERENCE T HAT BORROWED FUNDS ARE NOT DIVERTED FOR NON BUSINESS PURPOSES. IN SUCH CIR CUMSTANCES THERE CAN BE NO DISALLOWANCES. 5.15 IN VIEW OF THE DISCUSSION IN THE FOREGOING PARAGRAP HS AND ALSO THE FACTS OF THE APPELLANT'S CASE UNDER CONSIDERATI ON, AND FURTHER THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE OF ALL OW ABILITY AND THE DISALLOW ABILITY OF THE INTEREST U/S.36(1)(III) OF THE ACT, ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN TO SUBSIDIARIES / SIST ER CONCERNS, WHICH APPARENTLY ARE IN FAVOUR OF THE APPELLANT AND AS TH E AO COULD NOT OBTAIN THE DETAILS AND ANALYZE THE SAME WHILE DECID ING THE ISSUE AGAINST THE APPELLANT, I HOLD THAT THE DISALLOWANCE MADE U/ S.36(1)(III), BEING PROPORTIONATE INTEREST ON THE INTEREST ATTRIB UTABLE TO SUCH ADVANCES, WAS NOT JUSTIFIED AS PER LAW. I THEREFORE , DELETE THE ENTIRE ADDITION MADE OF INTEREST AMOUNT OF RS.91,60,470/-. GROUND NO.1 RAISED BY THE APPELLANT IS ACCORDINGLY ALLOWED. 4. WE HAVE PERUSED THE CASE RECORDS AND ANALYZED TH E FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LD. CIT(APPEALS ) HAS PASSED HIS DECISION ON BOTH FACTUAL MATRIX AS WELL AS JUDICIAL PRONOUNC EMENT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA.). THE HON'B LE BOMBAY HIGH COURT HAS HELD THAT WHERE THE ASSESSEE HAD ADEQU ATE INTEREST FREE FUNDS BY WAY OF PROPRIETARY CAPITAL OR BY WAY OF INTEREST FREE D EPOSIT FOR CUSTOMERS, THERE IS AN INFERENCE THAT BORROWED FUNDS ARE NOT DIVERT ED FOR NON BUSINESS PURPOSES. IN SUCH CIRCUMSTANCES THERE CAN BE NO DISALLOWANCES . 5. FURTHER, IN THE CASE OF CIT VS. NEELKANTH SYSTHETICS A ND CHEMICALS P. LTD. REPORTED AS 330 ITR 463 (BOM.), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT WHERE THE LOAN WAS TAKEN TO REPAY THE LIABILITY OF THE SISTER 7 ITA NO.158 /PUN/2017 A.Y.2012-13 CONCERNS, INTEREST OF THE SAME IS TO BE ALLOWED ON GROUND OF COMMERCIAL EXPEDIENCY. FURTHERMORE, IT IS OBSERVED THAT THE ASSESS ING OFFICER COULD NOT OBTAIN ANY DETAILS AND ANALYZE THE SAME WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE FIND INGS OF THE LD. CIT(APPEALS) AND RELIEF PROVIDED TO THE ASSESSEE IS, THEREFOR E, SUSTAINED. HENCE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 23RD DAY OF JANUARY, 2019. SD/- SD/- R.S. SYAL PARTHA SARAT HI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 23 RD JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-3, PUNE. 4. THE PR. CIT-2, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 8 ITA NO.158 /PUN/2017 A.Y.2012-13 DATE 1 DRAFT DICTATED ON 22 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER