M/s C.R. Auluck & Sons Pvt. Ltd. Vs ACIT (ITAT Chandigarh)
Assessee has failed to establish its case of commercial expediency. The intention of assessee in advancing the said interest-free loan to its sister concern was not for the purpose of business because the two concerns were carrying on independent lines of manufacturing and the products manufactured were different by each of the concern. No evidence were brought on record to show the how the non-supply by the sister concern would affect the business of the assessee. That in the circumstances where interest bearing borrowed loans have been advanced for non business purposes, the ratio laid down by the Hon’ble Punjab & Haryana High Court in CIT Vs. Abhishek Industries (Supra) is applicable. Accordingly, we uphold the disallowance of Rs. 14,82,695/- being interest attributable to the interest free advances made by the assessee to its sister concern out of interest bearing borrowed funds.
FULL TEXT OF THE ITAT JUDGMENT
The appeal by the assessee is against the order of CIT(A)-II. Ludhiana dated 29.8.2008 relating to assessment year 2005-06 against the order passed under section 143(3) of the I.T. Act.
2. The asses see has raised the following grounds of appeal:
