Interest cannot be disallowed if huge interest free funds were available without any interest

CA Sandeep Kanoi

AO while making this addition has observed as under:-

“5. Addition on account of interest not charged on Advances:

On perusal of Balance sheet of the assessee, during the course of assessment proceeding, it is seen that the assesses has stated Rs.92,24, 794/- as other advances, out of which he has shown interest received from 2 partiesn (1) Gaurav Industries and (2) Amtex Dye Chem In

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