M/s A.P.Refinery (P) Ltd, Jagaron V. The Income Tax Officer, Malerkotla

ITA 463/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6680 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.463/CHD/2016 (ASSESSMENT YEAR : 2009-10) M/S A.P. REFINERY (P) LTD., VS. THE INCOME TAX OFFICER, VILLAGE SAROUD, LUDHIANA ROAD, WARD-4(3), MALERKOTLA. MALERKOTLA. (NOW VILLAGE TAPPAR HARNIA, NAKODAR JALANDHAR ROAD, JAGRAON) PAN: AAFCA1352B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SMT.ZEENIA HANDA, ADDL. CIT DR DATE OF HEARING :05.10.2017 DATE OF PRONOUNCEMENT :30.10.2017 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-2, LUDHIANA (HEREINAFTER REFERRED TO A S CIT(APPEALS) DATED 26.2.2016 RELATING TO ASSESSME NT YEAR 2009-10. 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDE R: 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- S, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN A S MUCH SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD TH E DISALLOWANCE OF RS. 2,24,340/- ON ACCOUNT OF UNDER- VALUATION OF CLOSING STOCK OF HUSK. 3. BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD 22,434 QUINTALS OF HUSK IN THE CLOSING STOCK 2 WHICH WERE VALUED BY THE ASSESSEE AT AVERAGE PRICE. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E HAD PURCHASED HUSK AT RATES WHICH RANGED BETWEEN RS.148 TO RS. 154 PER QUINTAL IN THE MONTHS OF FEB AND MARCH, 2009. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESS EE HAD ALSO SHOWN PURCHASE OF PHOOSA @ RS.110 PER QUINTAL BUT THE SUPPORTING BILLS/VOUCHERS OF THE SAME WERE UNDA TED AND DID NOT BEAR ANY NUMBER. THE ASSESSING OFFICER THE REFORE TOOK THE AVERAGE COST PRICE OF HUSK AT RS.150 AND DIFFERENCE OF RS.10, AS OBSERVED BY THE ASSESSING O FFICER, BETWEEN ACTUAL VALUATION DONE BY THE ASSESSEE AND T HAT DONE HIM, WAS ADDED TO THE VALUE OF CLOSING STOCK. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.2,24,340/- (RS.22,434 X 10) ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. 4. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE MADE DE TAILED SUBMISSIONS REPRODUCED AT PARA 5.2 OF THE ORDER STA TING THAT IT HAD VALUED THE CLOSING STOCK OF RICE HUSK A T AVERAGE RATE OF PURCHASE WHICH METHOD WAS BEING CONSISTENTL Y FOLLOWED BY IT EVERY YEAR AND DETAILS OF THE SAME H AD ALSO BEEN FILED TO THE ASSESSING OFFICER. THE LD.CIT(AP PEALS) REJECTED SUBMISSIONS OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER STATING AS U NDER: 5.3 I HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. I AM INCLINED TO AGREE WITH THE CONTENTION OF ID. AO. THE AS SESSING OFFICER HAS BROUGHT OUT THE BASIS OF ADOPTION OF CLO SING STOCK VALUATION IN WHICH THE APPELLANT HAS FAILED TO CONTR OVERT. THE APPELLANT HAS NOT CONTROVERTED THE INFERENCE OF ID. AO WITH THE SUPPORT OF BILLS AND VOUCHERS AND THE BASIS OF IT S VALUATION SHOWN BY THE APPELLANT. THEREFORE IN MY 3 CONSIDERED VIEW THE ACTION OF ID. AO. IS RIGHT. THE APPEL LANT HAS FAILED TO FURNISH ANY PLAUSIBLE CONTENTION IN SUPP ORT OF LOW VALUATION OF CLOSING STOCK WITH PRODUCTION OF RELA TED BILLS AND VOUCHERS. THEREFORE, THE ADDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK IS ORDERED TO BE CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED THE CONTENTIONS MADE BEFORE THE LOWER AUTHORITIES S TATING THAT IT HAD BEEN CONSISTENTLY FOLLOWING METHOD OF V ALUATION OF CLOSING STOCK OF HUSK AT THE YEARLY AVERAGE OF P URCHASE PRICE OF THE SAME. THE LD. COUNSEL FOR ASSESSEE DR EW OUR ATTENTION TO THE DETAILS OF THE CALCULATION OF THE SAME FOR BOTH THE UNITS RUN BY THE ASSESSEE FILED BEFORE THE LOWER AUTHORITIES AND PLACED AT PAPER BOOK PAGE NOS. 12 & 13. THE LD. COUNSEL FOR ASSESSEE STATED THAT IN VIEW OF THE SAME, THERE WAS NO REASON TO DISTURB THE METHOD FOL LOWING CONSISTENTLY BY THE ASSESSEE. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD CONTENTIONS OF BOTH THE PARTIES, P ERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO GONE THROU GH THE DOCUMENTS PLACED BEFORE US. WE FIND MERIT IN THE CO NTENTION OF THE LD. COUNSEL FOR ASSESSEE. THE ASSESSEE HAS A LL ALONG CONTENDED THAT IT HAS BEEN CONSISTENTLY FOLLOWING T HE AVERAGE COST METHOD OF VALUING ITS CLOSING STOCK. DETAILS W ITH REGARD TO THE VALUATION FOR THE IMPUGNED YEAR WERE ALSO FI LED TO THE ASSESSING OFFICER. THESE FACTS REMAIN UNCONTROVERT ED BY THE REVENUE. FURTHER WE FIND THAT NO FAULT HAS BEEN F OUND IN THIS METHOD OF VALUATION VIS--VIS DETERMINATION OF THE TRUE 4 AND CORRECT PROFITS OF THE ASSESSEE. THEREFORE, AN Y DISTURBANCE OR CHANGE IN THE SYSTEM/METHOD OF VALUA TION WAS TOTALLY UNWARRANTED. FURTHER NO REASON HAS BEEN GIVEN FOR ADOPTING THE AVERAGE RATE OF PURCHASE OF LAST T WO MONTHS FOR VALUING THE CLOSING STOCK. THEREFORE, THIS MET HOD OF VALUATION ADOPTED BY THE REVENUE NEEDS TO BE REJECT ED. FURTHER, WE FIND THAT THE REVENUE HAS CONTENDED THA T THE ASSESSEE HAS SHOWN PURCHASE OF PHOOSA @ RS.110 PER QUINTAL WHICH BILLS WERE FOUND UNDATED AND UNNUMBER ED MEANING THEREBY THAT THEY WERE BOGUS. BUT AT THE S AME TIME, WE FIND THAT NO DISALLOWANCE OF PURCHASE BOOK ED ON ACCOUNT OF SUCH BILLS HAS BEEN MADE. THEREFORE, TH ERE IS NO MERIT IN THE CONTENTION OF THE REVENUE THAT THE STO CK HAS BEEN UNDERVALUED DELIBERATELY BY THE ASSESSEE. THEREFORE, FOR THE ABOVE REASONS, WE HOLD THAT THE ADDITION MADE ON ACCOUNT OF UNDER VALUATION OF STOC K AMOUNTING TO RS.2,24,340/- BE DELETED. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE, THEREFORE, STANDS ALLOWED. 8. GROUND OF APPEAL NO.2 (A) RAISED BY THE ASSESSEE READS AS UNDER: 2. THAT THE LD. CIT(A) WAS FURTHER NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF INTEREST U/S 36(1)(III) ON THE FOLLOWING:- A) RS. 36,85,302/- ON ACCOUNT OF INTEREST REQUIRED TO B E CAPITALIZED; 9. BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE 5 HAD DEBITED RS.84,89,380.43 AS INTEREST AND FINANCI AL CHARGES. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAD STARTED THE UNIT-II DURING THE YEAR AND AS SUCH HAD AVAILED FINANCE FROM THE BANKS AND BY WAY OF UNSECU RED LOANS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THAT WHY PROPORTIONATE INTEREST SHOULD NOT BE ADDED BACK BECAUSE PRODUCTION STARTED ONLY ON 19.02.2009. IN H IS REPLY THE ASSESSEE SUBMITTED THE DETAILS OF INTEREST SEPA RATELY FOR THE TWO UNITS I.E. UNIT-L (OLD UNIT) AND UNIT-LL (N EW UNIT). FROM THE PERUSAL OF ACCOUNTS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD WRONGLY CLAIMED CERTAIN AMOU NTS OF INTEREST AND PROCESSING CHARGES IN THE UNIT-L, THE ASSESSING OFFICER FURTHER OBSERVED THAT UNIT-L WAS ON LEASE D URING THE YEAR UNDER CONSIDERATION, HENCE, THE ASSESSING OFFI CER DID NOT ACCEPT THE INVESTMENT IN THIS UNIT. THE ASSESSI NG OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD NOT F ULLY CAPITALIZED THE RELEVANT AMOUNT. THEREFORE, AMOUNT OF INTEREST WHICH OUGHT BE DISALLOWED AND BE CAPITALI ZED WAS CALCULATED BY THE ASSESSING OFFICER AS FOLLOWS: A. OUT OF INTEREST BANK A/C RS. 491621.50 . INTEREST DEBITED IN THE ACCOUNTS PNB CC A/C 3881008700002843 AND PNB CC A/C 3881008700002852 AS ABOVE UPTO 19.02.200 ARE CALCULATED AT RS.2243650. B. OUT OF INTEREST (T/L) A/C RS. 1385462,52, INTE REST DEBITED IN THE ACCOUNTS PNB T/L. A/C 3881 00I.C0000109 AS ABOVE & IC1CI T/L UPTO 19.02.2009 IS CALCULATED AT RS.L225857.00 C. OUT OF TOTAL AMOUNT OF PROCESSING FEES RS.288525.48 RS.215795.48 DEBITED BEFORE 19.02.2009, AS IT PERTAINS TO THE PROCESSING CHARGES LEVIED BY THE BANK IN RELATION TO NEW LOAN AND CC ACCOUNTS RAISED DURING THE YEAR IN RELATION TO UNIT-2 . AS SUCH TOTAL AMOUNT OF RS.36,85,302.00 [RS.2243650.00 + RS.1225857.00 + RS.215795.00] WAS 6 DISALLOWED FROM THE INTEREST AND FINANCIAL CHARGES AS CALCULATED ABOVE AND ADDED BACK TO THE RETURNED INC OME. 10. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE MADE DE TAILED SUBMISSIONS REPRODUCED AT PARA 7.2 OF THE ORDER CON TENDING THAT THERE WAS NO NEED FOR CAPITALIZATION OF ANY IN TEREST TOWARDS THE SETTING UP OF UNIT-II BY ASSESSEE SINCE THE ASSESSEE HAD ON ITS OWN CAPITALIZED INTEREST AMOUNT ING TO RS.37,65,517/- WHICH WAS MUCH MORE THAN THE AMOUNT CAPITALIZED BY THE AO OF RS.36,85,302/-. IT WAS CO NTENDED THAT SEPARATE DETAILS OF INTEREST PERTAINING TO UNI T-I AND UNIT-II OF THE ASSESSEE HAD BEEN FILED TO THE ASSES SING OFFICER AND THE ASSESSING OFFICER HAD CAPITALIZED T HE INTEREST INCURRED ON ACCOUNT OF UNIT-1 WHICH WAS AL READY IN COMMERCIAL PRODUCTION AND WAS AN OLD UNIT. THE ASS ESSEE POINTED OUT THAT IN UNIT-I THE ASSESSEE COMPANY HAD BEEN DEALING WITH PUNJAB & SIND BANK AS WELL AS ICICI BA NK IN RESPECT OF CREDIT FACILITIES BUT ON THE SETTING UP OF UNIT-II IT GOT CREDIT FACILITIES FROM PUNJAB NATIONAL BANK WHI CH TOOK OVER EXISTING LIMITS FROM OTHER TWO BANKS ALSO. TH E ASSESSEE POINTED OUT THAT IN THIS CONFUSION THAT PU NJAB NATIONAL BANK LIMITED PERTAINS TO UNIT-II THE ASSES SING OFFICER HAD CAPITALIZED THE AMOUNT OF INTEREST IN R ESPECT OF FACILITIES AVAILED BY UNIT-I ALSO. THE ASSESSEE FU RTHER SUBMITTED THAT PROCESSING CHARGES WERE ALL ENTIRELY PAID IN RESPECT OF UNIT-I ONLY. THE LD.CIT(APPEALS) DISMIS SED CONTENTIONS AND SUBMISSIONS MADE BY THE ASSESSEE AN D 7 UPHELD THE FINDINGS OF THE ASSESSING OFFICER BY STA TING AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED RIVAL SUBMISSION. WHILE GOING INTO DETAILED SUBMISSION BY APPELLANT AND THE ASSESSMENT ORDER, I AM INCLINED TO AGREE WITH THE CONTENTION OF THE AO. THE AO HAS POINTED OUT THAT PRODUCTION STARTED ONLY ON 19.02.2009. FROM THE PERUSAL OF ACCOUNTS THE AO OBSERVED THAT THE APPELLANT HAD WRONGLY CLAIMED THE CERTAIN AMOUNTS OF INTEREST AND PROCESSING CHARGES IN THE UNIT-I. THE AO FURTHER OBSERVED THAT UNIT-I WAS ON LEASE DURING THE YEAR UNDER CONSIDERATION, HENCE, THE AO DID NOT ACCEPT THE INVESTMENT IN THIS UNIT. IN VIEW OF THE FACTS OF THE CASE I AGREE WIT H THE VIEW OF THE AO THAT THE APPELLANT HAD NOT FULL Y CAPITALIZED THE RELEVANT AMOUNT. 11. BEFORE US, THE LD. COUNSEL FOR ASSESSEE REITERA TED SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES DRAWI NG OUR ATTENTION TO THE RELEVANT DETAILS OF INTEREST PAID VIS--VIS OF TWO UNITS FILED AT PAGE NO.15-18 OF THE PAPER BOOK. 12. THE LD. DR, ON THE OTHER HAND RELIED UPON THE O RDER OF THE ASSESSING OFFICER. 13. WE HAVE HEARD CONTENTIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO GONE THROU GH THE DOCUMENTS PLACED BEFORE US. WE FIND THAT THE ENTIRE EXERCISE OF THE REVENUE OF CAPITALIZING INTEREST EX PENDITURE RESTS ON THE PREMISE THAT NO INTEREST EXPENSES VIS- -VIS SETTING UP OF UNIT-II WAS CAPITALIZED BY THE ASSESS EE. THE ASSESSMENT ORDER FINDS NO MENTION OF THIS FACT. EVEN THE LD.CIT(APPEALS), WE FIND, HAS NOT TAKEN COGNIZANCE OF THIS AVERMENT MADE BY THE ASSESSEE. THEREFORE, CONSIDERING THE FACT THAT THE ASSESSEE H AD ITSELF CAPITALIZED AN AMOUNT OF RS.37,65,517/- WHICH IS MO RE THAN 8 WHAT THE REVENUE HAS CALCULATED AT RS.36,85,302/-, WE HOLD THAT THERE IS NO NEED FOR CAPITALIZATION OF ANY FUR THER AMOUNT. MOREOVER, WE FIND THAT THE CONTENTION OF T HE ASSESSEE THAT SEPARATE DETAILS OF INTEREST CHARGED VIS--VIS UNIT-I AND UNIT-II WERE FILED AND IT WAS ONLY INTER EST PAID VIS--VIS PERTAINING TO UNIT-I WHICH WAS CAPITALIZE D BY THE ASSESSING OFFICER HAS NOT BEEN CONTROVERTED BY THE REVENUE. UNDENIABLY THE AO HAS CAPITALIZED INTEREST PERTAINI NG TO PNB CC A/C, PNB T/L A/C AND OUT OF PROCESSING FEES LEVIED BY BANK IN RELATION TO NEW LOAN AND CC ACCOUNTS. TH E ASSESSEE HAD STATED THAT THESE LOANS DID NOT PERTAI N TO UNIT-II, BUT IN FACT TO UNIT-I LOANS ONLY WHICH WER E ORIGINALLY TAKEN FROM PUNJAB & SIND BANK BUT LATER SHIFTED TO PNB BANK AND SINCE THE LOANS IN UNIT II HAD BEEN TAKEN FROM PNB THE AO HAD CONFUSED THESE LOANS AS PERTAIN ING TO UNIT-II. THE PROCESSING CHARGES WERE ALSO STATED TO BE VIS-A- VIS THE CONVERSION OF THE AFORESAID LOANS. THE REVE NUE HAS NOT CONTROVERTED THESE FACTS. THEREFORE THERE REMAI NS NO BASIS AT ALL FOR HOLDING THAT THESE LOANS PERTAINED TO UNIT II. NO DISALLOWANCE OF INTEREST WAS THEREFORE WARRANTED IN THE ABOVE SET OF FACTS. IN VIEW OF THE ABOVE WE DELETE THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.36,85,302/-. GROUND OF APPEAL NO.2(A) THEREFORE STANDS ALLOWED. 14. GROUND NO.2(B) RAISED BY THE ASSESSEE READS AS UNDER: B) RS. 2,81,500/- ON ACCOUNT OF INTEREST-FREE NON- BUSINESS ADVANCES. 9 15. BRIEF FACTS ARE THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAD GIVEN INTEREST FREE LOAN TO ITS SISTER CONCERN M/S A.P. SOLVEX LTD., DHURI ON 11.10.2008. THE ASSESSEE WAS ASKED AS TO WHY PROPORTIONATE INTEREST FOR 50 LACS FOR TH E PERIOD 11.10.2008 TO 25.02.2009 AT THE AVERAGE RATE OF 15% SHOULD NOT BE DISALLOWED. THE ASSESSING OFFICER WAS NOT SA TISFIED WITH THE ASSESSEE CONTENTION. THEREFORE INTEREST WA S CHARGED @15 ON AVERAGE BASIS FORM 11.10.2008 TO 25.02.2009 WHICH CAME TO RS.2,81,500/- AND WAS DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER PLACED RELIANCE THE DECISION OF PUNJAB & HAYNANA HI GH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LT D. 16. THE LD.CIT(APPEALS) DISMISSED THE GROUND RAISED BEFORE IT AND UPHELD THE ORDER OF THE ASSESSING OFF ICER STATING THAT THE COMMERCIAL EXPEDIENCY OF GIVING TH E ADVANCE WAS NOT ESTABLISHED BY THE ASSESSEE. 17. BEFORE US, THE ONLY CONTENTION RAISED BY LD. CO UNSEL FOR ASSESSEE WAS THAT IT HAD ENOUGH OWN SURPLUS F UNDS TO MAKE THE IMPUGNED ADVANCE. THE LD. COUNSEL FOR ASSE SSEE DREW OUR ATTENTION TO THE BALANCE SHEET OF THE ASSE SSEE STATING THAT IT HAD OWN INTEREST FREE FUNDS IN THE SHAPE OF CAPITAL RESERVES AND SURPLUS AND SHARE APPLICATION MONEY AMOUNTING TO RS.10.68 CRORES, WHILE THE ADVANCE GI VEN AMOUNTED TO RS.50 LACS. THE LD. COUNSEL FOR ASSESS EE POINTED OUT THAT THE LAW ON THE ISSUE OF DISALLOWAN CE U/S 36(1)(III) OF THE ACT HAS BEEN SETTLED BY THE HON'B LE 10 JURISDICTIONAL HIGH COURT IN A NUMBER OF DECISIONS WHEREIN IT HAS BEEN STATED THAT WHERE THE ASSESSEE HAD SUFF ICIENT OWN INTEREST FREE FUNDS FOR MAKING INTEREST FREE AD VANCES, NO DISALLOWANCE U/S 36(1)(III) OF THE ACT IS WARRAN TED. 18. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LOWER AUTHORITIES AND STATED THAT IN THE ABS ENCE OF ANY COMMERCIAL EXPEDIENCY HAVING BEEN ESTABLISHED F OR MAKING SAID ADVANCES, DISALLOWANCE U/S 36(1)(III) O F THE ACT HAD BEEN RIGHTLY MADE. 19. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. UNDOUBTEDLY, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES VS CIT (2016) 381 ITR 10 7, HAS STATED THAT IN THE FACT SITUATION OF AVAILABILITY O F INTEREST FREE FUNDS FOR THE PURPOSE OF MAKING INTEREST FREE ADVANCES THE PRESUMPTION SHOULD BE THAT THE SAID ADVANCES HA D BEEN MADE OUT OF OWN INTEREST FREE FUNDS WARRANTING NO DISALLOWANCE U/S 36(1)(III) OF THE ACT. 20. IN THE PRESENT CASE, IT HAD BEEN DEMONSTRATED B Y THE LD. COUNSEL FOR ASSESSEE THAT IT HAD SUFFICIENT INT EREST FREE FUNDS TO MAKE THE SAID ADVANCES WHICH HAVE NOT BEEN CONTROVERTED BY THE LD. DR. IN VIEW OF THE SAME AND FOLLOWING THE JUDICIAL PRECEDENT THIS REGARD, WE HOLD THAT NO DISALLOWANCE U/S 36(1)(III) OF THE ACT IS WARRANTED IN THE PRESENT C ASE AND 11 THEREBY DIRECT TO DELETE THE DISALLOWANCE SO MADE AMOUNTING TO RS.2,81,500/-. GROUND NO.2(B) RAISED BY THE ASSESSEE, THEREFORE, STANDS ALLOWED. 21. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESS EE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH OCTOBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH