Diamond Textiles Mills Pvt. Ltd., Ahmedabad V. ITO, Ward-1(1)(4), Ahmedabad

ITA 346/AHD/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0777 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMA PRASAD
• Keywords: Proportionate interest; Corroborative evidences
• Section: 250; 264; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 346/AHD/2018 (ASSESSMENT YEAR: 2014-15) DIAMOND TEXTILES MILLS PVT. LTD. 201, NIKOL ROAD, OPP. THAKKARBAPA NAGAR, AHMEDABAD-382 350 V/S INCOME TAX OFFICER, WARD- 1 (1)(4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACD 3997L APPELLANT BY : MS. ARTI N. SHAH, C.A RESPONDENT BY : SHRI UMA PRASAD, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -10-201 9 DATE OF PRONOUNCEMENT : 10 -12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-1, AHMEDABAD DATED 30.11.2017 PERTAINING TO A.Y. 2014-15 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 2 1. THE LEARNED COMMISSIONER OF INCOME TAX, ( APPEALS)-L, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF INTEREST ON INTEREST FREE LOANS AND ADVANCES AMOUNTING TO RS.52 ,76,097/- THOUGH THE ADVANCES WERE GIVEN FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND THE APPELLANT HAD SUFFICIENT INTEREST FREE FUNDS FOR TH E SAME. 2. YOUR APPELLANT PRAYS TO RESERVE THE RIGHT TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL. 2. FACTS OF THE CASE ARE AS EMANATED FROM THE ASSESSME NT ORDER: 5. DISALLOWANCE OF INTEREST ON INTEREST FREE LOAN AND ADVANCES:- 5.1 FROM THE DETAILS FURNISHED, IT IS OBSERVED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES TO THE TUNE OF RS.864.94 LAKHS. F URTHER, THE ASSESSEE HAS GIVEN INTEREST FREE LOANS AND ADVANCE OF RS.9,67,83,921/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EX PLAIN WHY THE CORRESPONDING INTEREST ON SUCH LOANS AND ADVANCES S HOULD NOT BE TREATED AS EXPENSES INCURRED FOR NON BUSINESS PURPOSE AND WHY THE SAME SHOULD NOT BE DISALLOWED U/S 36(L)(III) OF THE I.T. ACT. IN THIS CONNECTION, THE ASSESSEE HAS FURNISH THE BR EAKUP OF LOANS AND ADVANCES AS UNDER- SHORT-TERM LOANS AND ADVANCES RS. 95,19,652/- ADVANCE TO STAFF RS.7,16,515/- ADVANCE TO OTHERS RS. 5,86,63,137/- BALANCE WITH STATUTORY AUTHORITY RS. 2,78,84,617/- IN RESPECT OF SHORT TERM LOANS AND ADVANCES MAD TO SUPPLIERS AND ADVANCE TO OTHERS, IT WAS SUBMITTED THAT THE ADVANCES WERE MAD E AS BUSINESS ADVANCES. HOWEVER, THE ASSESSEE COULD NOT FURNISH THE EVIDENC ES THAT THE ADVANCES WERE MADE FOR BUSINESS PURPOSE IN RESPECT OF FOLLOWING A DVANCES- 1. TIRUPATI TEXTILES RS. 5,00,000/- 2. SHREE VAIBHAV CORPORATION RS. 5,00,000/- 3. VIRENEXIMPVTLTD RS. 5,00,000/- 4. ADV. FOR BUNGLOW AT NAVRANGPURA RS. 12,02,920/- 5. ADV. FOR LAND PURCHASE MITHAKHALI CITY SN RS.25, 00,000/- 6. ASHOKBHAI BHAVANBHAI PATEL RS. 17,87,562/- 7. OM SHREE OWNERS ASSOCIATION RS.9,77,000/- 8. DINESH RAMGOPAL SHARMA RS. 50,00,000/- 9. . NANDA DINESH SHARMA RS. 50,00,000/- ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 3 10. ASHWINBHAI ADV FOR LAND SAIJPUR-GOPALPUR R S. 1,00,00,000/- 11. PRANAV S SHAH RS. 25,00,000/- 12. KOHINOOR CREATIONS PVT LTD RS. 1,35,00,0 00/- TOTAL RS. 4,39,67,482 IN RESPECT OF PERSONS MENTIONED ABOVE, THE ASSESSEE COMPANY FAILED TO SUBSTANTIATE WITH SUPPORTING EVIDENCES THAT ADVANCE S WERE GIVEN FOR BUSINESS PURPOSE. FURTHER, NOTICE WAS ISSUED ON 22.11.2016 O N THE ABOVE ISSUE. IN RESPONSE TO WHICH THE ASSESSEE HAS FURNISH THE CHAR T WHICH WAS ALSO FURNISH ALONG WITH REPLY DATED 22.11.2016. 5.2 THE SUBMISSION OF THE ASSESSEE HAS BEEN PERUSED BUT THE SAME IS NOT TENABLE. THE ASSESSEE IN THIS REGARD HAS SUBMITTED THAT THE FUNDS HAVE BEEN ADVANCED TO THEM FOR BUSINESS PURPOSE. HOWEVER, ON THE EXAMINAT ION OF THE LEDGER ACCOUNT OF THE SAID PARTIES, IT HAS BEEN FOUND THAT THE ASSESS EE UNLIKE OTHER PARTIES TO WHOM IT HAS EXTENDED BUSINESS ADVANCES DOES NOT HAVE ANY BUSINESS TRANSACTIONS WITH THE SAID PARTIES. 5.3 INTEREST ON BORROWED CAPITAL IS ALLOWED AS A DE DUCTION FROM BUSINESS ONLY IF IT SATISFIES THE CONDITION THAT IT IS FOR THE PURPOSE OF BUSINESS OR PROFESSION. WHERE THE MONEY BORROWED WAS DIVERTED FOR GIVING INTEREST FREE LOANS, THE PROPORTIONATE INTEREST ATTRIBUTABLE TO SUCH LOANS C OULD BE LEGITIMATELY DISALLOWED BY THE ASSESSING OFFICER. IT WAS SO HELD IN S.A. BU ILDERS LTD. V. CIT (2004) 269 ITR 535 (P&H). FURTHER, THIS VIEW WAS ACCEPTED IN CIT V . H.R. SUGAR FACTORY PVT. LTD. [1971] 187 ITR 363 (ALL) IN A CASE, WHERE MONEY WAS BORROWED FOR PURPOSES OF BUSINESS, BUT ADVANCED AT A CONCESSIONAL RATE TO IT S DIRECTORS, SO THAT THE HIGH COURT UPHELD THE INFERENCE OF THE REVENUE TO DISALL OW THE AMOUNT TO THE EXTENT OF DIFFERENCE IN INTEREST RATES, THOUGH THE REVENUE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE FUNDS ALLEGEDLY DIVERTED. THE HIGH COURT POINTED OUT THAT NO BUSINESS PURPOSE WAS SERVED BY SUCH LENDING AND THA T THE AMOUNTS WERE SUBSTANTIAL AND CANNOT BE GLOSSED OVER AND THAT THE FACT THAT THE ASSESSEE BORROWS MONEY FOR ITS BUSINESS CANNOT BY ITSELF JUS TIFY THE DEDUCTION. THE TRIBUNAL'S APPROACH IN ALLOWING DEDUCTION FOR THESE REASONS WAS CHARACTERIZED BY THE HIGH COURT AS 'NOT ONLY SUPERFICIAL BUT TOO NAIV E'. 5.4 WHERE THE ASSESSEE LENDS MONEY WITHOUT INTEREST , THERE CAN BE NO INFERENCE OF NOTIONAL INCOME BASED ON REASONABLE INTEREST, WH ICH THE ASSESSEE MIGHT HAVE CHARGED FOR LENDING TO RELATIVES OR SISTER CONCERNS /OTHERS. BUT THEN, IT IS POSSIBLE IN SUCH CASE, TO DISALLOW A PROPORTIONATE PART OF I NTEREST PAID ON SUCH BORROWED CAPITAL, IF ANY, TO THE EXTENT THAT THE BORROWED FU NDS ARE UTILIZED FOR INTEREST-FREE ADVANCES. DISALLOWANCE IS THEREFORE MADE ON THE GRO UND THAT IT WILL NOT BE ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 4 ELIGIBLE FOR DEDUCTION AS EXPENDITURE INCURRED WAS NOT FOR PURPOSES OF BUSINESS. FURTHER, RELIANCE IS PLACED ON THE FOLLOWING DECISI ONS:- 1. PATEL FILTER LTD. VS. CIT [2003] 264 ITR 21 (GUJ .) 2. CIT VS. VALLABH GLASS WORKS LTD. [1982] 137 ITR 389 (GUJ.) 3. CIT VS. H. R. SUGAR FACTORY PVT. LTD. [1991] 187 ITR 363 (ALL.) 4. INDIAN SAVING PRODUCTS LTD. VS. CIT [2004] 265 I TR 250 (RAJ.) 5. CALDERN PHARMACEUTICAL PVT. LTD. VS. CIT [2004] 265 ITR 244 (KAL.) 6. CIT VS. BOMBAY SAMACHAR LTD. [1969] 74 ITR 723 ( BOM.) 7. K. SOMASUNDRAM & BRO. [1999] 238 ITR 939 (MADRAS ) 8. ELMER HAVELL ELECTRICS VS. CIT [2005] 277 ITR 54 9 (DEL.) THUS, THE CONTENTIONS OF THE ASSESSEE LACKS MERIT AND COULD NOT BE SUBSTANTIATED. 5.5 IN VIEW OF THE ABOVE NARRATED FACTS AND THE JUD ICIAL PRONOUNCEMENTS, THE CLAIM OF THE ASSESSEE IN RESPECT OF INTEREST IS NOT ALLOWED. SINCE THE ASSESSEE HAS BEEN PAYING INTEREST @ 12% ON LOANS ACCEPTED. THERE FORE, INTEREST EXPENSES IN PROPORTION TO THE FUNDS DIVERTED FOR NON BUSINESS P URPOSE AMOUNTING TO RS. 52,76,097/(12% OF RS. 4,39,67,482/-) IS HEREBY DISA LLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE DISALLOWANCE OF RS. 52,76,097/-, ASSESS EE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTI ON OF THE ASSESSING OFFICER WITH FOLLOWING OBSERVATIONS: 4.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION OF THE APPELLANT CAREFULLY. THE ASSESSING OFFICER HAS MADE DISALLOWANCE OUT OF INTEREST OF RS.52,76,0977-. IT IS PERTINENT TO NOTE THAT SIM ILAR DISALLOWANCE WAS MADE BY THE AO FOR THE FIRST TIME IN A.Y. 2012-13 WHICH WAS FOLLOWED IN THE ASSESSMENT ORDERS FOR THE SUBSEQUENT ASSESSMENT YEARS I.E. A.Y S. 2013-14, 2014-15. THE SIMILAR DISALLOWANCE WAS MADE BY ASSESSING OFFICER IN A. Y.2012-13 WHEREIN CIT(A)-1 VIDE ORDER DATED 30TH AUGUST, 2016 IN APPE AL NO. 134/CIT(A)-1 HAS HELD AS UNDER: 4.3 'I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER HAS STATED THAT INTEREST FREE LOANS AND ADVANCES HAVE B EEN GIVEN TO VARIOUS PARTIES AMOUNTING TO RS. 12,78,83,916/- AND OTHER L OANS AND ADVANCES ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 5 ARE OF RS.2,14,10,507/-. THE ASSESSING OFFICER HAS OBSERVED THAT APPELLANT HAS ADVANCED LOANS & ADVANCES SHORT TERM / LONG TER M MADE TO VARIOUS PARTIES IN CASES OF THE PERSONS BOTH OPENING AND CL OSING BALANCES ARE SAME BUT THERE IS NO TRANSACTION MADE RELATED TO TH E PARTIES (AS PER TABLE ON PAGES 11-12 OF THIS ORDER) WHOM THE INTEREST AMO UNT OF RS.49,79,253/- SHOULD HAVE BEEN CHARGED. INTEREST ON BORROWED CAPI TAL IS ALLOWED AS A DEDUCTION FROM BUSINESS ONLY IF IT SATISFIES THE CO NDITION THAT IT IS FOR THE PURPOSE OF BUSINESS OR PROFESSION. WHERE THE MONEY BORROWED WAS DIVERTED FOR GIVING INTEREST FREE LOANS, THE PROPOR TIONATE INTEREST ATTRIBUTABLE TO SUCH LOANS COULD BE LEGITIMATELY DI SALLOWED BY THE ASSESSING OFFICER. IT WAS SO HELD IN S.A. BUILDERS LTD. V. CIT (2004) 269 ITR 535 (P&H). FURTHER, THIS VIEW WAS ACCEPTED IN CIT V /S H.R. SUGAR FACTORY PVT. LTD. [1971] 187 ITR 363 (ALL). WHERE MONEY WAS BORROWED FOR PURPOSES OF BUSINESS, BUT ADVANCED AT A CONCESSIONA L RATE TO ITS DIRECTORS, SO THAT THE HIGH COURT UPHELD THE INFERENCE OF THE REVENUE TO DISALLOW THE AMOUNT TO THE EXTENT OF DIFFERENCE IN INTEREST RATE S, THOUGH THE REVENUE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE FUNDS ALLEGEDLY DIVERTED. IN VIEW OF THE ABOVE NARRATED FACTS AND THE JUDICIAL P RONOUNCEMENTS, THE CLAIM OF THE ASSESSES IN RESPECT OF INTEREST IS NOT ALLOWED. SINCE THE ASSESSES HAS BEEN PAYING INTEREST @ 12% ON LOANS AC CEPTED, THEREFORE, INTEREST EXPENSES IN PROPORTION TO THE FUNDS DIVERT ED FOR NON BUSINESS PURPOSE AMOUNTING TO RS.49,79,253/-- IS HEREBY DISA LLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LEARNED A.R. HAS SUBMITTED WRITTEN SUBMISSIONS IN THE MATTER AND HAS ARGUED THAT THE AMOUNTS OF ADVANCES ARE GIVEN FOR B USINESS PURPOSE ONLY AND IN SUPPORT OF THE SAME HE HAS FURNISHED COPIES OF ACCOUNT TO VARIOUS PERSONS. HE HAS ALSO FURNISHED A DETAILED CHART SHO WING THEREIN THE PURPOSE OF ADVANCES, WHICH IS PLACED ON PAGES 216 A ND 217 OF THE PAPER BOOK. IT IS ALSO ARGUED BY THE A.R. THAT ON ADVANCE S, WHICH ARE NATURE OF BUSINESS, NO INTEREST IS CHARGED AND THIS IS THE NO RMAL TRADE PRACTICE PREVAILING IN BUSINESS. SIMILARLY, ON ADVANCE RECEI VED FROM THE CUSTOMER, NO INTEREST IS PAYABLE TO THE CUSTOMER ON SUCH ADVA NCE AMOUNT. IT WAS, THEREFORE, SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING RS.49,79,253/- OUT OF INTEREST EXPENDIT URE. 4.4. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSION FILED BY APPELLANT. THE A.O. IN THE IMPUGNED ORDER HAS OBSERVED THAT APPELLANT HAD DEBITED AN AMOUNT OF RS.49,79,253/- B EING INTEREST PAID ON LOANS OBTAINED SECURED & UNSECURED AND IT IS NOTICE D THAT THE ASSESSEE ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 6 HAS NOT CHARGED INTEREST FROM THE PERSONS/PARTIES T O WHOM IT HAS GIVEN ADVANCE. IT IS OBSERVED THAT INTEREST FREE LOAN & A DVANCES SHORT TERM / LONG TERM MADE TO VARIOUS PARTIES IN CASES OF THE P ERSONS BOTH OPENING AND CLOSING BALANCES ARE SAME BUT THERE IS NO TRANS ACTION MADE RELATED TO THE PARTIES (AS PER TABLE ON PAGES 11-12 OF THIS OR DER) AND NO INTEREST HAVE BEEN CHARGED. INTEREST ON BORROWED CAPITAL IS ALLOWED AS A DEDUCTION FROM BUSINESS ONLY IF IT SATISFIES THE CO NDITION THAT IT IS FOR THE PURPOSE OF BUSINESS OR PROFESSION. WHERE THE MONEY BORROWED WAS DIVERTED FOR GIVING INTEREST FREE LOANS, THE PROPOR TIONATE INTEREST ATTRIBUTABLE TO SUCH LOANS COULD BE LEGITIMATELY DI SALLOWED BY THE ASSESSING OFFICER. IT WAS SO HELD IN S.A. BUILDERS LTD. V, CIT (2004) 269 ITR 535 (P&H). FURTHER, THIS VIEW WAS ACCEPTED IN CIT V. H.R. SUGAR FACTORY PVT. LTD. [1971] 187 ITR 363 (ALL) IN A CASE, WHERE MONEY WAS BORROWED FOR PURPOSES OF BUSINESS, BUT ADVANCED AT A CONCESS IONAL RATE TO ITS DIRECTORS, SO THAT THE HIGH COURT UPHELD THE INFERE NCE OF THE REVENUE TO DISALLOW THE AMOUNT TO THE EXTENT OF DIFFERENCE IN INTEREST RATES, THOUGH THE REVENUE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE FUNDS ALLEGEDLY DIVERTED. THE APPELLANT HAS FAILED TO PROVE THAT THE AMOUNTS ADVANCED ARE FOR BUSINESS PURPOSE AND THE MONEY BORROWED HAS BEEN DIVERTED FOR GIVING INTEREST FREE LOANS TO THE SAID PERSONS, AND THEREFORE, HE DISALLOWED RS.49,79,253/- OUT OF INTEREST PAYMENT. THE APPELLA NT HAS NOT UTILIZED THE INTEREST BEARING FUND FOR ITS BUSINESS PURPOSE BUT ADVANCED THE SAME AS INTEREST FREE AND LOWER RATE OF 12%. THE EXPENDITUR E U/S.36(1))(III) OF THE ACT IS ALLOWABLE IF THE BORROWED FUND ARE UTILIZED FOR THE PURPOSE OF BUSINESS. IN VIEW OF THE ABOVE, RS.49,79,253/-DISAL LOWED U/S. 36(1)(III) OF THE I. T. ACT, TREATING THE SAME IS NOT INCURRED WH OLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. SINCE THE ASSESSEE HAS BEE N PAYING INTEREST @ 12% ON LOANS ACCEPTED, THEREFORE, INTEREST EXPENSES IN PROPORTION TO THE FUNDS DIVERTED FOR NON BUSINESS PURPOSE AMOUNTING T O RS.49,79,253/- DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE IS CONFIRMED. THE GROUND OF THE APPELLANT IS DISMISSED'. AFTER GOING THROUGH THE FACTS OF THE CASE, IT IS SE EN THAT THERE IS NO CHANGE WITH RESPECT TO THE FACTS AND POSITION IN LAW DURING THE YEAR UNDER CONSIDERATION FROM THOSE EXISTED IN THE PRECEDING ASSESSMENT YEARS. FA CTS AS WELL AS POSITION IN LAW REMAINING THE SAME DURING THE YEAR ARE IDENTICAL TO THE PREVIOUS YEAR IN THE CASE OF DISALLOWANCE OF COMMISSION EXPENSES, FOLLOWING T HE RATIO OF DECISION OF THE ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 7 EARLIER YEAR, THE DISALLOWANCE MADE BY THE A.O. OF RS.52,76,0977- IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 4. IN THIS CASE, ASSESSEE IS IN THE BUSINESS OF MANUFA CTURING OF TEXTILES, HANDLOOMS & POWER LOOMS. ASSESSEE HAS CLAIMED INTEREST EXPENS ES TO THE TUNE OF RS. 864.94 LAKHS. FURTHER, ASSESSEE HAS GIVEN INTEREST FREE LOANS AND ADVANCE OF RS. 9,67,83,921/- FOR BUSINESS PURPOSES. AND ADVANCES W ERE GIVEN TO SUPPLIER OF THE MATERIAL AND WERE MADE FOR BUSINESS PURPOSE. 5. AND IN SUPPORT OF ITS CONTENTION, LD. A.R. STATED T HAT IT HAS FILED THE BALANCE SHEET AS AT MARCH, 31, 2014 WHEREIN ALL THE DETAILS WERE GIVEN. AND APART FROM THAT ASSESSEE HAS ALSO SUBMITTED THE DETAILS OF THE TRADE RECEIVABLES AND ASSESSEE IS HAVING INTEREST FREE FUNDS I.E. SHARE CAPITAL AN D RESERVES OF RS. 7214 LAKHS AND SHARE APPLICATION MONEY OF RS. 200 LAKHS AND CONTEN DED THAT ADVANCES ON WHICH INTEREST IS NOT CHARGED IS RS. 43967482/- ARE LESS THAN INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. 6. IN SUPPORT OF ITS CONTENTION, ASSESSEE HAS CITED AN ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.YS. 2012-13 & 2013-14 IN ITA NO. 2709/AHD/2016 & 1071/AHD/2017 WHEREIN SIMILAR FACTS AND CIRCUMSTANCES, RELIEF WAS GRANTED BY THE CO-ORDINATE BENCH WITH FO LLOWING OBSERVATIONS: 21. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. A PERUSAL OF THE DOCUMENTARY EVIDENCES SHOWS THAT ASS ESSEE WAS HAVING INTEREST FREE FUNDS AVAILABLE WITH IT TOTALING TO RS. 48.58 CRORES AND THE IMPUGNED ADVANCES WERE AT RS. 12.78 CRORES. THIS SHOWS THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE FAR MORE IN EXCESS OF THE INTEREST FREE ADVANCES. WE FURTHER FIND THAT LONG TERM LOAN FROM BANKS, MAT URITY TERM LOAN AND UNSECURED LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS. 32.80 CRORES WHEREAS THE TOTAL PROJECT EXPENSES WHICH INCLUDED FIXED ASS ETS AND CAPITAL WORK IN PROGRESS AMOUNTED TO RS. 64.76 CRORES. THIS SHOWS T HAT THE TERM LOANS TAKEN BY THE ASSESSEE HAVE BEEN UTILIZED IN FIXED ASSETS AND CAPITAL WORK IN PROGRESS. ITA NO. 346/ AHD/2018 . A.Y. 2014- 15 8 22. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE O F CONSUMER MARKETING (INDIA) (P.) LTD. 64 TAXMANN.COM 16, ON IDENTICAL F ACTS HAS HELD THAT THE TERM LOAN ON WHICH DEDUCTION OF INTEREST WAS SOUGHT, HAD ENTI RELY BEEN USED FOR THE PURPOSE OF PURCHASING THE ASSETS AND THE ASSESSEE H AS SUFFICIENT INTEREST FREE FUNDS TO TAKE CARE OF THE ADVANCES. THEREFORE, THE DISALLOWANCE OF INTEREST WAS NOT JUSTIFIED. 23. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT (SUPRA), WE DO NOT FIND ANY JUSTIFICATION IN THIS DISALLOWANCE OF INTEREST. 24. WE ACCORDINGLY DIRECT THE A.O. TO DELETE THE DI SALLOWANCE OF RS. 49,79,253/-. GROUND NO. 3 IS ALLOWED. 7. IN PARITY WITH THE ABOVE SAID CO-ORDINATE BENCH ORD ER, WE ALLOW APPEAL OF THE ASSESSEE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 12- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 10/12/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD