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Income Tax Appellate Tribunal, CHANDIGARH BENCH
Before: SH. SANJAY GARG
VIRTUAL HEARING आदेश/ORDER The present appe al has been preferred by the assessee against the order dated 18.01.2024 of the Commissioner of Income Tax (Appe als)-5, Ludhiana (hereinafter referred to as ‘CIT(A)’ ) pertaining to 2017-18 assessment year.
The assessee is aggrieved by the action of the lower authorities in making/confirming the addition of Rs.6,15,208/- under Section 36(1)(iii) of the Income Tax Act, 1961. 2. The brief facts are that the AO noticed that the assessee during the year had made certain interest free advances to ITA-74/CHD/2024 A.Y. 2017-18 Page 2 of 4 relate d parties out of interest bearing funds. He, accordingly, made the disallowance under Section 36(1)(iii) of the Act by calculating interest @ 12% on the said advances. The detail of which is as under :
Sr, Name of the persons to whom loans & Rate of Total amount of No. advances given Interest interest 1. Gagan Satia yes Bank account 12% 4800 2. Gagandeep Singh S/o Rajan Satia 12% 14959 3. Neeru Satia 12% 13808 4. Neeru Satia 12% 3200 5. Rajan Satia HUF 12% 14729 6. Rajan Satia Indl. 12% 45909 7. Rajan Satia 12% 4320 8. Sanalsa Satia 12% 25249 9- Satia Indian Oil Store 12% 446998 10. Satia Multiventures 12% 39455
The ld. CIT(A) confirmed the additions so made by the AO.
Before us the ld. Counsel for the assessee has demonstrated that so far as the parties mentioned at Sr.No. 1 (Gagan Satia) Sr.No. 4 (Neeru Satia) and Sr.No. 7 (Rajan Satia) were concerned, the assessee during the year did not make any interest free advances to the said parties. In fact, in the balance sheet of the assessee, the amounts which the AO has taken as interest free advances, were the amounts payable by the assessee on account of amounts borrowed/interest payable by the assessee to these parties.
ITA-74/CHD/2024 A.Y. 2017-18 Page 3 of 4
The ld. counsel has further de monstrated that so far as the party at Sr.No. 8 namely Sanalsa Satia is concerned, she is the minor daughter of the assessee and the assessee had invested the amount in Recurring Deposit in her name. That since she is minor, the said amount belonged to the assessee and there was no question of making interest free advances.
He has further demonstrated that party at Sr.No.9 i.e., Satia Indian Oil Store, is the proprietorship concern of the assessee and therefore, the said party is not a separate entity. So far as the party at Sr.No. 10 is concerned, the ld. Counsel for the assessee has submitted that the assessee has 78% share in the said concern and the amount in question was on account of capital investment. The ld. Counsel for the assessee further submitted that so far as the party at Sr.No. 2, 3, 5 and 6 were concerned, the assessee had sufficient interest free funds available with it to meet the advances made to them. He in this respect has relied upon the copy of the balance sheet of the assessee as on 31.03.2017 to submit that the assessee had sufficient capital/interest free/own funds available with it to meet the investments. He has further demonstrated that there was no nexus of interest bearing funds with the amounts advanced to the said parties.
The ld. DR could not rebut the aforesaid facts on file.
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In view of this, the impugned additions are not sustainable and the same are, accordingly, ordered to be deleted.
In the result, appeal of the assessee stands allowed.
Order pronounced on 04.11.2024. ( संजय गग") (SANJAY GARG ) "या"यक सद"य/ Judicial Member “Poonam”