Shri Abdulhaq Shamsulhaq Iraki, Ahmedabad V. The ACIT.,Ahmedabad Range-2, Ahmedabad

ITA 3512/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57052 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K L THAKER
• Keywords: Business income; Source of fund; Commercial expediency; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI MUKUL KUAMR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 243/ AHD/2011 (ASSESSMENT YEAR 2007-08) INAMULHAQ S IRAKI, PROP. OF IRAKI TRADING CO., BADAMI MASJID, TAVDIPURA, SHAHIBAUG, AHMEDABAD PAN/GIR NO. : AABPI3662D VS. ADDL. CIT, RANGE 2, AHMEDABAD I.T.A.NO. 3512/AHD/2010 (ASSESSMENT YEAR 2007-08) ABDULHAQ SHAMSULHAQ IRAKI, VS. ACIT, RANGE 2, PROP. TARUN ENTERPRISE, AHMEDABAD HEENA HOUSE, OLD MAYUR SOAP FACTORY, TAVDIPURA, AHMEDABAD PAN/GIR NO. : AAFPI5495L (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI K L THAKER, AR RESPONDENT BY: SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING: 16.12.2011 DATE OF PRONOUNCEMENT: 31.01.2012 O R D E R PER SHRI A. K. GARODIA, AM:- BOTH THESE APPEALS ARE FILED BY TWO DIFFERENT ASS ESSEES FOR THE SAME ASSESSMENT YEAR 2007-08 AND THESE APPEALS ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) XVI, AHMEDABAD DATED 24.11.2010 IN THE CASE OF INAMUL HAQ IRAKI AND DATED 22.10.2010 IN TH E CASE OF ABDULHAQ SHAMSULHAQ IRAKI. SINCE, THE ISSUE INVOLVED IS SIM ILAR IN BOTH THESE I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 2 APPEALS, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE REPRODUCE GROUNDS RAISED IN I.T.A.NO. 243.AHD/2011 WHICH ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE DISALLOWANCE OF RS.2,81,657/- MADE BY THE A.O. OUT OF THE CLAIM OF INTEREST. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) OUGHT TO HAVE DELETED THE SAID DISAL LOWANCE. 3) IT IS THEREFORE, PRAYED THAT THE DISALLOWANCE OF RS .2,81,657/- MAY BE DELETED. 3. NOW, WE REPRODUCE GROUNDS RAISED BY THE ASSESSEE IN I.T.A.NO. 3512/AHD.2010 WHICH ARE AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE DISALLOWANCE OF RS.2,63,912/-ASSESS ING OFFICER OUT OF CLAIM OF INTEREST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE A RID IN TAW THE LEARNED C.I.T. (A) OUGHT TO HAVE DELETED THE DISALL OWANCE IT IS THEREFORE PRAYED THAT THE DISALLOWANCE OF RS.2,63,9 12 MAY BE DELETED. 3 . YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY GROUND OF APPEAL AT THE TIME OF HEARING. 4. THIS APPEAL IS FILED LATE BY THREE DAYS. THE SMALL DELAY IN FILING THE APPEAL WAS DUE -TO CIRCUMSTANCES BEYON D THE CONTROL OF THE APPELLANT AND FOR NO FAULT ON HIS PART . IN THE CIRCUMSTANCES THE SMALL DELAY IN FILING THIS APPEAL MAY KINDLY BE CO NDONED KEEPING IN VIEW THE HON'BLE 'SUPREME COURT JUDGEMENT REPORT ED IN 167 I.T.R 471. 4. WE FIND THAT THE ONLY ISSUE INVOLVED IN BOTH THESE APPEALS IS REGARDING DISALLOWANCE OF INTEREST. BRIEF FACTS IN I.T.A.NO. 243/AHD/2011 ARE NOTED BY LD. CIT(A) IN PARA 2.1 OF HIS ORDER WHICH IS REPRODUCED BELOW: 2.1 THESE GROUNDS ARE REGARDING DISALLOWAN CE OF RS. 281657/- IN RESPECT OF INTEREST EXPENSES CLAIMED IN THE RETURN,; IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT THE AS SESSEE HAS GIVEN I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 3 INTEREST FREE ADVANCES TO SHRI NASIR ALI AND PAWAN KUMAR TIBREWALA HUF. THE BALANCE OUTSTANDING AT THE END O F THE YEAR IN THE ACCOUNT OF THESE PARTIES WERE RS. 5 LACS AND RS. 25 LACS RESPECTIVELY, THE ASSESSEE HAS NOT CHARGED ANY IN TEREST ON THESE ADVANCES GIVEN TO THESE PARTIES. EVEN THOUGH THE AS SESSEE HAS DEBITED INTEREST EXPENDITURE OF RS. 13,74,881/- IN THE P8D_ ACCOUNT BEING THE INTEREST PAID ON UNSECURED LO ANS BORROWED BY THE ASSESSEE. THE AO THEREFORE ASKED THE ASSESSEE T O EXPLAIN WHY ON PROPORTIONATE BASIS THE INTEREST BE NOT DISALLOW ED AT THE LOANS TAKEN ON INTEREST TO THE EXTENT OF LOANS GIVEN WITH OUT CHARGING INTEREST IS NOT FOR THE PURPOSE OF BUSINESS. THE AS SESSEE STATED THAT THE LOANS AND ADVANCES WERE GIVEN FOR THE PURPOSE O F BUSINESS. THE AO STATED THAT HE HAS EXAMINED THE COPY OF ACCOUNT OF THIS PARTY, AND THERE IS NO BUSINESS TRANSACTION ENTERED IN THE ACCOUNT OF T HIS PARTY AND HENCE THERE IS NO BUSINESS CO NNECTION OR COMMERCIAL CONNECTION. AH THE TRANSACTIONS ARE OF FINANCIAL NATURE. THE AO THEREFORE DISALLOWED THE INTEREST OF RS. 281657/- OUT OF THE INTEREST CLAIM. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. SIMILARLY, THE FACTS IN THE APPEAL NO. I.T.A.NO. 3512/AHD/2010 TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PAR A 3.1 OF HIS ORDER IN THAT CASE, WHICH IS REPRODUCED BELOW: 3.1 THIS GROUND IS REGARDING DISALLOWANCE OF RS.26 3912/- IN RESPECT OF INTEREST EXPENSES CLAIMED IN THE RETURN. IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT THE ASSESS EE HAS GIVEN INTEREST FREE ADVANCES TO SHRI ABDUSUMILLI SHIVAJIR AO. THE BALANCE OUTSTANDING AT THE END OF THE YEAR IN THE ACCOUNT O F THIS PARTY WAS RS.21,99,269/-, THE ASSESSEE HAS NOT CHARGED ANY IN TEREST ON THIS ADVANCE GIVEN TO THIS PARTY. EVEN THOUGH THE ASSESS EE HAS DEBITED INTEREST EXPENDITURE OF RS.13,07,904/- IN THE P & L ACCOUNT BEING THE INTEREST PAID ON UNSECURED LOANS BORROWED BY TH E ASSESSEE. THE AO THEREFORE ASKED THE ASSESSEE TO EXPLAIN WHY ON P ROPORTIONATE BASES THE INTEREST BE NOT DISALLOWED AT THE LOANS T AKEN ON INTEREST TO THE EXTENT OF LOANS GIVEN WITHOUT CHARGING INTEREST IS NOT FOR THE PURPOSE OF BUSINESS. THE ASSESSEE STATED THAT THE L OANS AND ADVANCES WERE GIVEN FOR THE PURPOSE OF BUSINESS. TH E AO STATED I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 4 THAT HE IS EXAMINED THE COPY OF ACCOUNT OF THIS PAR TY, AND THERE IS- NO BUSINESS TRANSACTION ENTERED IN THE ACCOUNT OF T HIS PARTY AND HENCE THERE IS NO BUSINESS CONNECTION 'OR COMMERCIA L CONNECTION. ALL THE TRANSACTIONS ARE OF FINANCIAL NATURE. THE A.O. THEREFORE, DISALLOWED THE INTEREST OF RS.263912/- OUT O THE IN TEREST CLAIM. 7. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSE E IS IN FURTHER APPEAL BEFORE US. 8. LD. A.R. PLACED RELIANCE ON THE FOLLOWING JUDICI AL PRONOUNCEMENTS: (A) 285 ITR 554 CIT VS PREM HEAVY ENGINEERING WORK S P. LTD. (B) 260 ITR 363 CIT VS TIN BOX CO. (DEL.) (C) 304 ITR 123 CIT VS MOTOR SALES LTD (ALLD.) (D) 132 TTJ 233, MADHU INDUSTRIES VS ITO (E) 313 ITR 340 CIT VS RELIANCE UTILITIES & POWER LTD (BOM.) 9. AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW. HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS STEEL INDUSTRIES VS CIT & ANOTHER AS REPORTED IN 324 ITR 396 (DEL.). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF S A BUILDERS AS REPORTED IN 288 ITR 01 (S.C.) AND SUBMITTED THAT AS PER THE JUDGEMENTS OF HONBLE APEX COURT, COMMERCIAL EXPEDIENCY HAS TO BE SATISFIED BY THE ASSESSEE WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. THEREFORE, THE ORDER OF LD. CIT(A) SHOULD BE CONFIRMED IN BOTH THESE CASES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENTS CITED BY BOTH THE SIDES. WE FIND THAT I N THE PRESENT CASE IN I.T.A.NO. 243/AHD/2011, IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES OF RS.30 LACS ON WHICH ASSESSEE HAS NOT CHARGED ANY INTEREST AND THE ASSES SEE HAS DEBITED INTEREST I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 5 EXPENSES OF RS.13,74,881/- IN THE P & L ACCOUNT. W HEN THE A.O. CONFRONTED THE ASSESSEE AND ASKED TO EXPLAIN AS TO WHY THE AMOUNT OF INTEREST ATTRIBUTABLE TO FUNDS UTILIZED FOR GIVING INTEREST FREE ADVANCES, SHOULD NOT BE DISALLOWED, IT WAS ARGUED BY THE ASSE SSEE BEFORE THE A.O. THAT THE ADVANCES WERE GIVEN FOR THE BUSINESS PURPO SES. THE A.O. HAS STATED IN THE ASSESSMENT ORDER THAT HE HAS SEEN THE COPY OF ACCOUNT OF THESE PARTIES AND HAVE FOUND THAT THERE IS NO BUSIN ESS TRANSACTION ENTERED IN THE ACCOUNT OF THESE PARTIES AND ALL THE TRANSAC TIONS ARE FINANCIAL IN NATURE. ON THIS BASIS, HE MADE DISALLOWANCE OF INT EREST ATTRIBUTABLE FOR MAKING INTEREST FREE ADVANCES AND THERE WAS NO ARGU MENT MADE BEFORE THE A.O. THAT INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. BEFORE LD. CIT(A), TH IS SUBMISSION WAS MADE THAT THE INTEREST FREE ADVANCES WERE NOT GIVEN IN THE PRESENT YEAR BUT WERE GIVEN IN THE EARLIER YEARS BUT THERE IS NO SUC H CONTENTION RAISED BEFORE THE CIT(A) ALSO THAT THESE INTEREST FREE ADV ANCES WERE GIVEN OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. BEFORE US ALSO, THE ASSESSEE HAS SIMPLY PLACED RELIANCE ON SOME JUDGMEN TS BUT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BEFORE US TO SHOW THAT T HESE INTEREST FREE ADVANCES WERE GIVEN OUT OF INTEREST FREE FUNDS AVAI LABLE WITH THE ASSESSEE OR THESE INTEREST FREE ADVANCE WERE GIVEN FOR BUSIN ESS EXPEDIENCY. THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2007, IS AVAILABLE ON PAGE 8 OF THE PAPER BOOK, AS PER WHICH PROPRIETORS CAPITAL W AS RS.64.30 LACS WHEREAS THE AMOUNT UTILIZED FOR FIXED ASSETS AND IN VESTMENTS WAS AT RS.106.27 LACS. HENCE, WE FIND THAT NO INTEREST FR EE FUNDS WERE AVAILABLE WITH THE ASSESSEE FOR GIVING INTEREST FREE ADVANCES . THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2006 IS ALSO AVAILABLE ON PAGE 16 OF THE PAPER BOOK, AS PER WHICH PROPRIETORS CAPITAL ACCOUNT HAS BALANCE OF RS.51.15 LACS AND FUNDS UTILIZED FOR FIXED ASSETS AND INVEST MENTS WAS RS.101.67 I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 6 LACS AND HENCE, IT IS SEEN THAT IN THIS YEAR ALSO, NO INTEREST FREE FUNDS WEE AVAILABLE WITH THE ASSESSEE FOR GIVING INTEREST FRE E ADVANCES. REGARDING BUSINESS EXPEDIENCY, NO EVIDENCE HAS BEEN BROUGHT O N RECORD BEFORE THE AUTHORITIES BELOW OR BEFORE US THAT THE IMPUGNED AD VANCES WERE GIVEN FOR BUSINESS EXPEDIENCY. REGARDING THE JUDGMENT OF HON BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA), WE FIND THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PR ESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE FACTS ARE T HAT INVESTMENTS WERE MAINLY MADE DURING JANUARY 2000 TO MARCH 2000 AND I T WAS SUBMITTED BY THE ASSESSEE THAT THEY HAD EARNED REGULAR BUSINESS INCOME FROM DISTRIBUTION OF POWER AND INVESTMENTS MADE WERE IN THE ENERGY SECTOR AND WERE WITH A VIEW TO BUILD LONG TERM BUSINESS PROSPE CTS AND INVESTMENTS WERE IN THE REGULAR COURSE OF BUSINESS. REGARDING INTEREST BEARING BORROWED FUNDS OF RS.43.62 CRORES, IT WAS NOTED THA T THE SAME WAS USED FOR CAPITAL EXPENDITURE. REGARDING THE FUNDS USED FOR MAKING INVESTMENT, IT WAS SUBMITTED IN THAT CASE, INCOME FROM OPERATIO N WAS RS.418.04 CRORES WHICH WAS EVENLY DISTRIBUTED AND UP TO DECEM BER 99, ASSESSEE HAS EARNED RS.313.53 CRORES FROM ITS OPERATION AND IT H AS RAISED CAPITAL OF RS.7.90 CRORES AND HAD ALSO RECEIVED INTEREST FREE DEPOSITS OF RS.10.03 CRORES AND REALIZATION FROM DEBTORS HAS ALSO COME T O THE EXTENT OF RS.39.04 CRORES TOTAL RS.370.50 CRORES AND IF THE I NCOME FROM OPERATION AND FRESH CAPITAL AND INTEREST FREE DEPOSITS AND RE COVERY FROM DEBTORS ARE CONSIDERED, THE SAME WERE FOUND SUFFICIENT TO COVER THESE INVESTMENTS IN SHARES. IN THE PRESENT CASE, NO SUCH SOURCE IN THE YEAR OF INVESTMENT HAS BEEN BROUGHT OUT ON RECORD AND, THEREFORE, THIS JUD GMENT OF HONBLE BOMBAY HIGH COURT IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. - NOW, WE CONSIDER THE JUDGMENT OF HONBLE DELHI HI GH COURT RENDERED IN THE CASE OF CIT VS PREM HEAVY ENGINEERI NG WORKS P. LTD. I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 7 (SUPRA). THIS JUDGMENT IS ALSO NOT APPLICABLE IN T HE PRESENT CASE AS THE FACTS ARE DIFFERENT. IN THAT CASE, IT WAS NOTED TH AT SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE FOR GIVING INTEREST FREE ADVAN CES WHEREAS, IN THE PRESENT CASE, THE FACTS ARE DIFFERENT. - NOW, WE CONSIDER THE APPLICABILITY OF THE JUDGMEN T OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS MOTOR SA LES LTD. (SUPRA). THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THERE WAS A CLEAR FIN DING THAT THERE WAS NO DIVERSION OF BORROWED FUNDS FOR NON COMMERCIAL PURP OSES AND ON THIS BASIS, IT WAS HELD THAT NO PART OF INTEREST COULD B E DISALLOWED. IN THE PRESENT CASE, INTEREST FREE FUNDS WERE NOT SUFFICIE NT FOR FINANCING THE BUSINESS ASSETS AND MOREOVER, IT COULD NOT BE ESTAB LISHED THAT BORROWED FUNDS WERE NOT DIVERTED FOR GIVING INTEREST FREE AD VANCES AND HENCE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE . - NOW, WE CONSIDER THE APPLICABILITY O9F THE JUDGME NT OF HONBLE DELHI HIGH COURT IN THE CASE OF TIN BOX (SUPRA). I N THAT CASE, INTEREST WAS PAID BY THE ASSESSEE ON OVERDRAFT FROM STATE BA NK OF INDIA AGAINST HYPOTHECATION OF GOODS ETC AND PLEDGE OF LAND AND B UILDING, PLANT & MACHINERY ETC. A CLEAR FINDING IS GIVEN IN THAT CA SE THAT THE ASSESSEE HAS NOT PAID ANY INTEREST TO ANOTHER PARTY EITHER IN TH E PAST OR DURING THE RELEVANT YEAR. IN THE PRESENT CASE, THERE IS NO BO RROWING FROM BANK AND BORROWINGS ARE UNSECURED LOAN OF RS.126.72 LACS AND , THEREFORE, THE PURPOSE OF THESE UNSECURED LOANS AND USE THEREOF IS NOT STATIC WHEREAS THE PURPOSE OF BANK LOAN WAS FOR BUSINESS PURPOSE ALONE AND THEREFORE, THE FACTS ARE DIFFERENT IN THE PRESENT CASE AND HENCE, THIS JUDGMENT OF HONBLE DELHI HIGH COURT IS ALSO NOT APPLICABLE IN THE PRES ENT CASE. - NOW, WE CONSIDER THE APPLICABILITY OF TRIBUNAL DE CISION CITED BY THE LD. A.R. RENDERED IN THE CASE OF MADHU INDUSTRI ES (SUPRA). THIS IS NOT I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 8 APPLICABLE AS FACTS ARE DIFFERENT. IN THAT CASE, I NTEREST FREE ADVANCES WERE GIVEN TO SUPPLIERS AND HENCE, WERE BUSINESS ADVANCE S BUT IN THE PRESENT CASE, THE FACTS ARE NOT SO. - NOW, WE CONSIDER THE APPLICABILITY OF THE JUDGEME NT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF PUNJAB STA INLESS STEELS INDUSTRIES (SUPRA) WHICH HAS BEEN CITED BY THE LD. D.R. IN THAT CASE, IT WAS HELD BY HONBLE DELHI HIGH COURT THAT WHEN THE ASSESSEE HAS ADVANCED INTEREST FREE FUNDS TO SISTER CONCERNS FRO M BORROWED FUNDS AND THE ASSESSEE COULD NOT ESTABLISH THAT THERE WAS COM MERCIAL EXPEDIENCY FOR MAKING SUCH INTEREST FREE ADVANCES, DISALLOWANCE OF INTEREST IS JUSTIFIED. IN THE PRESENT CASE ALSO, THE ASSESSEE COULD NOT ES TABLISH COMMERCIAL EXPEDIENCY OF ADVANCING INTEREST FREE FUNDS AND THE REFORE, ON THIS ASPECT, THIS JUDGMENT OF HONBLE DELHI HIGH COURT IS AGAINS T THE ASSESSEE. IN THAT CASE, HONBLE DELHI HIGH COURT OBSERVED THAT IT MAY NOT BE RELEVANT AS TO WHETHER ADVANCES HAD BEEN EXTENDED OUT OF BORROWED FUNDS OR OUT OF MIXED FUNDS WHICH INCLUDE BORROWED FUNDS. IT WAS A LSO OBSERVED THAT THE TEST IN SUCH CASES IS NOT THE SOURCE OF FUNDS BUT T HE PURPOSE FOR WHICH THE ADVANCES WERE EXTENDED. THE RELEVANT PARA OF THIS JUDGMENT OF HONBLE DELHI HIGH COURT IS PARA 12, WHICH IS REPRODUCED BE LOW FOR THE SAKE OF READY REFERENCE: THE COMMERCIAL EXPEDIENCY, IN OUR VIEW, WOULD INCL UDE SUCH PURPOSE AS IS EXPECTED BY THE ASSESSEE TO ADVANCE I TS BUSINESS INTEREST AND MAY INCLUDE MEASURES TAKEN FOR PRESERV ATION, PROTECTION OR ADVANCEMENT OF ITS BUSINESS INTERESTS . THE BUSINESS INTEREST OF THE ASSESSEE HAS TO BE DISTINGUISHED FO RM THE PERSONAL INTEREST OF ITS DIRECTORS OR PARTNERS, AS THE CASE MAY BE. IN OTHER WORDS, THERE HAS TO BE A NEXUS BETWEEN THE ADVANCIN G OF FUNDS AND BUSINESS INTEREST OF THE ASSESSEE FIRM. THE APPROP RIATE TEST IN SUCH A CASE WOULD BE AS TO WHETHER A REASONABLE PERSON S TEPPING INTO THE SHOES OF THE DIRECTORS/PARTNERS OF THE ASSESSEE FIR M AND WORKING SOLELY IN THE INTEREST OF THE ASSESSEE FIRM/COMPANY , WOULD HAVE EXTENDED SUCH INTEREST FREE ADVANCES. SOME BUSINES S OBJECTIVE I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 9 SHOULD BE SOUGHT TO HAVE BEEN ACHIEVED BY EXTENDING SUCH INTEREST FREE ADVANCE WHEN THE ASSESSEE FIRM/COMPANY ITSELF IS BORROWING FUNDS FOR RUNNING ITS BUSINESS. IT MAY NOT BE RELE VANT AS TO WHETHER THE ADVANCES HAVE BEEN EXTENDED OUT OF THE BORROWED FUNDS OR OUT OF MIXED FUNDS WHICH INCLUDE BORROWED FUNDS. THE T EST TO BE APPLIED IN SUCH CASES IS NOT THE SOURCE OF THE FUND S BUT THE PURPOSE FOR WHICH THE ADVANCES WERE EXTENDED. 11. WE FIND THAT AS PER THIS JUDGMENT OF HONBLE DE LHI HIGH COURT, WHERE MIXED FUNDS ARE USED FOR THE PURPOSE OF GIVIN G INTEREST FREE ADVANCES, THE ONLY RELEVANT TEST IS AS TO WHETHER S UCH INTEREST FREE ADVANCES ARE DUE TO COMMERCIAL EXPEDIENCY OR NOT. IN THE PRESENT CASE ALSO, THE FUNDS ARE MIXED FUNDS AND THE ASSESSEE CO ULD NOT ESTABLISH ANY COMMERCIAL EXPEDIENCY AND HENCE, IN OUR CONSIDERED OPINION, THIS ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THIS JUDGM ENT OF HONBLE DELHI HIGH COURT AND RESPECTFULLY FOLLOWING THE SAME, THI S ISSUE IS DECIDED AGAINST THE ASSESSEE. 12. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE INVOLVED AND FACTS ARE IDENTICAL IN BOTH THE CASES AND HENCE, DECISION TAK EN IN ONE CASE CAN BE APPLIED IN OTHER CASE. HENCE, BY APPLYING THE SAME , BOTH THE APPEALS ARE DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. 14. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO. 243 /AHD/2011 I.T.A.NO. 3512/AHD/2010 10 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 24/1 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/1.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/1 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/1 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/1/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .