Case Law Details
ACIT Vs Banwarilall Pasari (ITAT Kolkata)
A perusal of the letter dated 28.01.2015 filed by the assessee during the course of assessment proceedings before the A.O. clearly shows that it was specifically pointed out by the assessee that the loans in question were given to the various parties out of internal accruals. Moreover, a perusal of the balance sheet of the assessee firm as at 31.03.2012 filed along with the return of income makes it abundantly clear that sufficient own funds in the form of partners capital were available with the assessee firm at the relevant time to give the loans in question free of any interest. In our opinion, these facts and figures available before the A.O. were sufficient to show that the interest free loans in question were given in assessee firm out of its own funds and there was no diversion of interest bearing borrowed funds warranting any disallowance out of interest expenditure claimed by the assessee.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These two appeals are preferred by the revenue against two separate orders of Ld. CIT(A) – 10, Kolkata both 30.08.2016 for A.Y. 2012-13 and 2013-14 and since one of the issues raised therein is common, the same have been heard together and are being disposed of by a single consolidated order for the sake of convenience.
2. First we take up the appeal of the revenue for A.Y. 2012-13, ground no 1 of which raises the issue relating to the deletion by the Ld. CIT(A) of the addition of Rs. 15,13,308/- made by the A.O. on account of disallowance out of interest.
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