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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2010-11, in the matter of order passed u/s.143(3) of the Act. 2. The only grievance of the assessee relates to disallowance of interest on account of interest free advances given to parties. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that assessee is engaged in the business of manufacturing and trading of Iron and Steel products. During the course of scrutiny of assessment, the AO disallowed interest of Rs.4,16,499/- out of interest paid by the assessee on loans taken for the purpose of 2 Ambhe Ferro Metal Processors Pvt. Ltd., business on account of funds utilized by assessee for giving interest free loans and advances to the related parties as under:- a. Ambhe Metal Udyog Rs.2814836.00 b. J.D.Steel Corp. Rs. 134485.00 c. Sushma S.Gupta Rs. 521500.00 5. By the impugned order CIT(A) confirmed the action of AO and assessee is in further appeal before us.
Learned AR has drawn our attention to the free reserve and capital of assessee-company as well as cash income earned by the assessee and it was submitted that in view of the assessee having sufficient interest free funds, no disallowance is warranted in view of the decision of Jurisdictional High Court in case of Reliance Utilities 313 ITR 340.
On the other hand, learned DR relied on the order of the lower authorities.
We have considered rival contentions and carefully gone through the orders of the lower authorities below. From the audited balance sheet placed on record, we found that assessee was having free resources to the tune of Rs.3,96,89,125/- in addition to the own capital of Rs.1,92,05,600/-. Furthermore, during the year itself we found that assessee has earned cash profit of Rs.4,03,00,000/-. As the own funds was much more than the advances given free of interest, in view of the decision of Jurisdictional High Court in case of Reliance Utilities as relied on by learned AR, we do not find any justification for the disallowance of interest so made.