Income Tax Appellate Tribunal - Chandigarh
M/S Hype Realtors Pvt. Ltd., Mohali vs Dcit, C-6(1), Mohali on 29 November, 2018
आयकर अपील
य अ धकरण,च डीगढ़ यायपीठ, "बी" च डीगढ़
I N TH E I N COM E T A X A P P EL L A T E T RI B UN A L
D I VISI O N B E NC H , ' B' , C H A ND I GA R H
ी संजय गग , या यक सद य एवं डा. बी.आर.आर, कुमार, लेखा सद य
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 6 1 6 / C H D / 2 0 1 8
नधा रण वष / Assessment Year : 2014-15
M/s Hype Realtors Pvt. Ltd., बनाम DCIT, Circle 6(1),
Plot no. 619, I.A. Phase 9, Mohali
Mohali
(Now H.N. 1026, Phase 10,
Mohali)
थायी लेखा सं./PAN NO: AABCH9090M
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Sh. Jaspal Sharma, Advocate
राज व क ओर से/ Revenue by : Sh. Manjit Singh, Sr DR
सन
ु वाई क तार%ख/Date of Hearing : 14.11. 2018
उदघोषणा क तार%ख/Date of Pronouncement : 29.11.2018
आदे श / Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 27.3.2018 of the Commissioner of Income Tax (Appeals)-2, Chandigarh [hereinafter referred to as CIT(A)].
2. The assessee has taken the following effective ground of appeal:-
"On the facts and circumstances of the case the Ld. CIT(A) has erred in having upheld the proportionate disallowance of Rs. 5,60,997/- made by the Ld. Assessing officer, out of interest on borrowed capital claimed by the assessee, by taking resort the provisions of section 36(1)(iii) of the Income Tax Act."ITA No.616/Chd/2018
M/s Hype Realtors Pvt Ltd, Mohali 2
3. The sole issue involved in this appeal is in relation to the notional disallowance of interest expenditure u/s 36(i)(iii) of the Income-tax Act, 1961 (in short 'the Act'). The undisputed fact in this case is that the assessee was possessed of sufficient own funds to meet the non-current investments. Further, that there was no direct correlation between the funds borrowed and the investments made by the assessee. However, Ld. CIT(A) confirmed the impugned disallowance made by the Assessing officer u/s 36(i)(iii) of the Act while relying upon the decision of the Hon'ble Jurisdictional High Court in the case of 'M/s Avon Cycles Ltd.' in ITA No. 277 of 2013 dated 20.8.2014, wherein, the Hon'ble High Court upheld the disallowance of interest expenditure in case of funds utilized by the assessee for investment being mixed funds. The Ld. CIT(A) further observed that the aforesaid decision of the Hon'ble Punjab & Haryana High Court in the case of 'Avon Cycles Ltd.' (supra) further came into consideration before the Hon'ble supreme Court in a group of cases with the lead case in Maxoop Investment Ltd. dated 12.2.2018, wherein, the decision of the Hon'ble High Court in the case of 'Avon Cycles Ltd.', (supra) have been affirmed by the Hon'ble Supreme court observing as under;-
"Taking note of the aforesaid finding of fact the High Court has dismissed the appeal of the assessee observing as under:-
"In the present case after examining the balance sheet of the assessee, a finding of fact has been recorded that the funds utilized by the assessee being mixed funds, therefore, the interest paid by the assessee is also an interest on the investment made. Such being as findings of fact, we do not find any substantial question of law arises for consideration of this court.ITA No.616/Chd/2018
M/s Hype Realtors Pvt Ltd, Mohali 3 After going through the records and applying the principle of apportionment which is held to be applicable in such cases awe do not find any merit in the Civil appeal No.1423 of 2015 which is accordingly dismissed."
In view of the above, the Ld. CIT(A) confirmed the addition so made by the Assessing officer.
4. We have heard the rival submissions and have also gone through the record. In this case, there is no rebuttal of the factual position that the assessee was possessed of own sufficient funds to meet the investment in question. So far as the reliance of the Ld. CIT(A) on the decision of the Jurisdictional High Court in the case of 'Avon Cycles Ltd Vs. CIT' (supra) which has been further affirmed by the Hon'ble Supreme Court while deciding bunch of cases with the lead case being 'Maxoppp Investment Ltd Vs. CIT' (supra) is concerned, the issue has come into consideration before the Coordinate Bench of the Tribunal in the case of 'ACIT Vs. Janak Global Resources Pvt Ltd' ITA No. 470/Chd/2018 order dated 16.10.2018 , wherein, the issue has been decided in favour of the assessee also considering the decision of the Hon'ble Apex Court in the case of 'Hero Cycles Vs. CIT' 379 ITR 347 (SC). The relevant part of the order of the Tribunal in 'ACIT Vs. Janak Global Resources Pvt Ltd' (supra) dated 16.10.2018, for the sake of completeness is reproduced herein under:-
" 7. T he L d. couns el for as s es s ee, on t he ot her hand, vehem ent l y oppos ed t hi s cont ent i on of t he L d. DR. T he L d. couns el f or as s es s ee poi nt ed out t hat the deci s i on r ender e d i n t he cas e of Avon C ycl es L t d. (s upr a ) w as on a di f f er en t s et of f act s and t he pr opos i t i on l ai d dow n t her ei n w as t o be ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 4 r ead i n t he cont e x t of t he f act s r el at i ng t o i t . It w as cont ended t hat bef or e t he Hon' bl e Supr eme C our t t he only f act bef or e t he Ho n'bl e C our t w as t hat t her e w er e mi xe d f unds avai l abl e w i th t he as s es s ee and i n t he l i ght of t his l i mi t ed f act , t he Hon' bl e Supr eme C our t uphel d the di s al l ow ance of i nter es t u/ s 14A of t he Act af t er hol di ng in t he l ead cas e i .e. Maxopp In ves t ment L t d. (s upr a ) t hat t he appor t i onment r ul e w as t o be appl i ed f or t he pur pos e o f maki ng di s al l ow ance of e xpens es i ncu r r ed i n r el at i on t o ear ni ng exempt i nc ome,as per s ect i on 14A of t he Act . T he cont ent i on of t he L d. couns el f or as s e s s ee w as t hat i t w as nei t her s ubmi t t ed t o t he cour t t hat s uf f i ci ent ow n i nt er es t f r ee f unds w er e a v ai l abl e, nor w er e any ar gument s mad e r ai s i ng t he pr es umpt i on t hat w oul d ar i s e i n s uch cas e. It w as poi nt ed out t hat even t he ques t i on bef or e t he Hon 'b l e C our t w as not r el at ing t o t he cor r ect nes s of t he pr es umpt i on t heor y and t her ef or e, al s o t he di s al l ow ance u/ s 14A w as not deal t w i t h by t he H on' bl e Supr eme C ou r t i n t hi s cont ext . I t w as cont ended t her ef or e, t hat t he deci s i on r ender ed i n t he cas e of Avon C ycl es L t d. (s upr a) ha d t o be r ead i n t he r es t r i ct ed s ens e, of meani ng t hat w her e t he f act s i t uat i on r eveal ed t he l i mi t ed f act of mi xed f und s avai l abl e w i t h t he as s es s ee, di s al l ow ance u/ s 14A w as w ar r ant ed. T he L d. couns el f or as s es s e e t her eaf t er cont en ded t hat i n f act t he Hon' bl e Apex C our t , i n t he cas e of Her o C ycl es Pvt . L t d. Vs. C IT , 379 IT R 347(SC ), had uphel d t he pr es umpt i on t heor y of ut i l i z at i on of ow n i nt er es t f r ee f unds f or maki ng non bus i nes s advances w her e s uf f i ci enc y of s uch f unds i s adequat el y demons t r at ed. It w as poi nt ed out t hat t he Hon'bl e Supr eme C our t i n t he s ai d cas e ,on t he i s s ue of di s al l ow ance of i nter es t u/ s 36(1 )(i i i ) on advances made t o di r ect or s had hel d t hat w her e t he ass es s ee had s uf f i ci ent s ur pl us es i t coul d have ut i l i z ed t ho s e f unds f or gi vi n g advances t o i t s di r ect or s .
8. T he L d. couns el f or as s es s ee s t at ed t h at i t i s cl ear l y evi dent f r om t he above t hat t he Hon'bl e Apex C our t had uphel d t he pr opos i t i on t hat w her e s uf f i ci ent ow n i nt er es t f r ee f unds ar e avai l abl e no di s al l owance of i nt er es t u/ s 36(1 )(i i i ) of t he Act w as w ar r ant ed. Our at t ent i on w as al so dr aw n t o var i ous deci s i ons of t he H on' bl e Jur i s di ct i onal Hi gh C our t w hi ch had al s o uphel d t he pr es umpt i on t heor y as under :
" 1. Br i ght Ent er pr i s es P. L t d. vs . C IT , (2016 ) 381 IT R 107 (P &H )
2. C IT vs . K aps ons As s oci at es , (2015 ) 381 IT R 204 (P &H ) ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 5
3. Gur das Gar g vs . C I T , IT A N o.413/ 2014 dat ed16.7.2015 (P &H ),
4. Pr .C IT vs . M/ s . Mal hot r a Book Depot , IT A N o.31 of 2017 dat ed 23.02.2017 (P &H )
5. Pr .C IT vs . M/ s . Hol y Fai t h Int er nat i onal Pvt . L t d., IT A N o.87 of 2017 dat ed 24.07.2017 (P &H )
6. T r i dent Inf ot ech C or por at i on L t d. vs . CIT & Anr , (2016 ) 385 IT R 335 (P &H )
7. C IT vs . Max Indi a L t d., (2017 ) 398 IT R 209 (P &H ) "
" 9. We hav e car ef ul l y c ons i der ed t he cont e nt i ons of bot h t he par t i es and ha v e al s o gone t hr oug h var i ous cas e l aw s r ef er r ed t o bef or e us . T he i s s ue t o be adj udi cat ed, as nar r ow ed dow n f r om t he ar gument s m ade bef or e us by bo t h t he par t i es , i s w het her i n r el at i on t o di s al l ow ance of i nt er es t made u/ s .3 6(1 )(i i i ) of t he A ct , t he pr opos i t i on l ai d dow n by t he Hon' ble Jur i s di ct i onal Hi gh C our t i n a number of deci s i ons , t hat w her e t he as s es s ee had s uf f i ci ent ow n i nt er es t f r ee f unds a l ong w i t h i nt er es t bear i ng f unds and ha d made or advanced s ums f or non bus i nes s pur pos es w i t hout char gi ng any i nt er e s t , t he pr es umpt i on t hat w oul d ar i s e i s t hat t he i nves t ment had been made out of i nt er es t f r ee f unds gener at ed or avai l abl e w i t h t he as s es s ee, i s s t i l l a good l aw i n t he l i ght of t he deci s i on of t he Hon' bl e Apex C our t i n t h e cas e of Her o C y cl es L t d. (s upr a ).
10. We ar e i n agr eeme nt w i t h t he cont ent i on of t he L d. couns el f or as s es s ee. Undoubt edl y, pr opos i t i on of l aw l aid dow n by cour t s have t o be r ead i n t he cont ext of t he f acts bef or e t hem and t he i s s ue deal t w i t h by t hem. Rel i an ce s houl d not be pl ac e d on a d eci s i on w i t hout di s cus s i ng how t he f act ual s i t uat i on f i t s i n w i t h t he f act ual s i t uat i on of t he deci s i on on w hi ch r el i ance i s pl aced. T he Hon'bl e Hi gh C our t of Bombay i n t he cas e of C IT vs Sudhi r , 214 IT R 154 (Bo m ) has obs er ved t hat a cas e i s an aut hor i t y f or w hat it act ual l y deci des an d not w hat may com e t o f ol l ow f r om s ome obs er vat i on w hi ch may f i nd pl ace t her ei n. T he Hon'bl e Hi gh cour t obs er ved as u nder :
"It is well-settled that the ratio of a decision alone is binding, because a case is only an authority for what it actually decides and not what may come to follow from some observations which find place therein. The ratio of the decision has to be distinguished from propositions assumed by the Court to be correct for the purpose of disposing of the particular case, because it is the ratio and not the ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 6 propositions which are relevant and binding. It is, therefore, not proper to regard every word, clause or sentence occurring in a judgment of the Court as containing a full exposition of the law. Judgments of the Courts should not be construed as statutes. They must be read as a whole and observations made therein should be considered in the light of the facts and circumstances of that case and the questions before the Court. A decision of the Court takes its colour from the questions involved in the case in which it is rendered."
In t he cas e of C IT vs Sun Engi neer i ng Wor ks Pvt . L t d. 198 IT R 297(SC ), t he Hon'bl e Supr eme C our t obs er ved t hat Judgement s mus t b e r ead as a w hol e and obs er vat i ons i n j udgement s s houl d be cons i der ed i n t he cont e xt i n w hi c h t hey ar e mad e and i n t he l i ght of t he ques t i on t hat w er e bef or e t he cour t :
" It i s nei t her des i r abl e nor per mi s s i bl e t o pi ck out a w or d or a s ent ence f r om t he j udgement of t he Supr eme C our t di vor ced f r o m t he cont ext of t he ques t i on under cons i der at i on and t r eat i t t o be the compl et e l aw decl ar ed b y t he cou r t . T he j udgement mus t be r ead as a w hol e and t he obs ervat i on f r om t he j udgement have t o be cons i der ed i n t he l i ght of t he ques t ions w hi ch w er e bef or e t he cour t .A deci s i on of t he Supr eme C our t t akes i t s col our f r om t he ques t i on i nvol ved i n t he cas e i n w hi ch i t i s r ender ed and w hi l e appl yi ng t he deci s i on t o a l at er cas e,cour t s mus t c ar ef ul l y t r y t o as cer t ai n t he t r u e pr i nci pl e l ai d dow n by t he deci s i on."
11. T he Hon'bl e apex c our t i n t he cas e of Goodyear Indi a L t d & Or s vs St at e of Har yana & A not her and St at e of Mahar as ht r a & Ano t her r epor t ed i n 188 IT R 402(1991 ) hav e hel d t hat a deci s i on on a ques t i on t hat has not been ar gued cannot be t r eat ed as a pr ecedent . T he Hon'bl e K er al a Hi gh C our t i n t he cas e of C IT vs K . Ramakr i s hnan (1993 ) 202 IT R 997 hel d t hat a pr e cedent i s an aut hor i t y onl y f or w hat i t act ual l y deci des an d not f or w hat ma y r emot el y or even l ogi cal l y f ol l ow f r om i t .
Havi ng s ai d s o w e f i nd t hat i n t he cas e of Avon C ycl e s L t d. (s upr a ) t he i s s ue w as r el at i ng t o di s al l ow ance of expendi t ur e u/ s 14A of t he Act . T he Hon' bl e Apex C ourt deal i ng w i t h t he bunch of cas es r el at i ng t o s ai d i s s ue, t ook up t he cas e of Ma x opp Inves t m ent L t d. (s upr a ) as t he l ea d cas e and pr o ceed e d t o ans w er t he q ues t i on w hi ch ar os e under var i ous ci r cu ms t ances bef or e t h em t hat w het her t he i nves t ment mad e i n s har es and s t oc ks f or t he pur pos e o f r et ai ni ng t he cont r ol over t he company or as s t ock-i n-t r ade and f r om w hi ch exempt i ncome by w ay of di vi dend w as gener at ed w oul d at tr act t he pr ovi s i ons of s ect i on 14A of t he ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 7 Act , cal l i ng f or dis al l ow ance of expendi t ur e i ncur r ed i n r el at i on t o ear ni ng t he s ai d di vi de nd i ncome and t he ques t i on ar os e f or the r eas on t hat i t was t he cont ent i on of t he as s es s ee, w hi ch had been uphel d by var i ous Hi gh C our t s , t hat t he domi nant pur pos e f or maki ng t he i n ves t me nt i n t he s har es not bei ng ear ni ng of di vi dend i ncome, i t cal l e d f or no di s al l ow ance of expendi t ur e u / s 14A of t he Act . Ans w er i ng t hi s ques t i on t he Hon' bl e Supr eme C our t hel d t hat t he domi nant pur pos e t es t w as i r rel evant and t he f ac t r emai ni ng t hat t he exempt i ncom e had been ear ned w hi ch w as at t ri but abl e t o t he di vi dend i ncome had t o be di s al l ow ed and coul d not be t r eat ed as bus i nes s expendi t ur e. T he Hon' bl e Apex C our t r eaf f i r med t he t heor y o f appor t i onment of expendi t ur e b et w ee n t axabl e and no n t axabl e i ncome l ai d dow n by it i n the cas e of C IT Vs. Wal f or t Shar e & St ock Br ok er s Pvt . L t d., 326 IT R 1. Af t e r hol di ng s o, t he Hon' bl e Apex C our t deal t w i t h t he appeal f i l ed i n t he cas e of Avon C ycl es L t d. (s upr a) and t a ki ng not e t hat t he f act i n t hat cas e w as t hat t he funds ut i l i z ed by t he as s es s ee w er e mi xed f unds , t he Hon' bl e Apex C our t hel d t ha t t he pr i nci pl e of a ppor t i onment w as t o be appl i ed and , t her ef or e, di s mi s s ed t he appeal of t he as s es s ee. T he s ame i s evi dent f r om a b ar e r eadi ng i n t he cas e of Maxop p Inves t ment L t d. (s up r a) and mor e s peci f i cal l y par a 42 of t he s ai d or der w her ei n t he cas e of Avon C y cl es L t d. (s upr a ) ha s been deal t w i t h and w hi ch i s r epr oduced agai n her eunder :
40. Civil Appeal No. 1423 of 2015 is filed by M/s. Avon Cycles Limited, Ludhiana, wherein the AO had invoked section 14A of the Act read with Rule 8D of the Rules and apportioned the expenditure. The CIT(A) had set aside the disallowance, which view was upturned by the ITAT in the following words:
"...Admittedly the assessee had paid total interest of Rs.2.92 crores out of which interest paid on term loan raised for specific purpose totals to Rs.1.70 crores and balance interest paid by the assessee is Rs.1.21 crores. The funds utilized by the assessee being mixed funds and in view of the provisions of Rule 8D(2)(ii) of the Income Tax Rules the disallowance is confirmed at Rs.10,49,851/-, we find no merit in the ad hoc disallowance made by the CIT (Appeals) Rs.5,00,000/-. Consequently, ground of appeal raised by the Revenue is partly allowed and ground raised by the assessee in cross-objection is allowed..."
Taking note of the aforesaid finding of fact, the High Court has dismissed the appeal of the assessee observing as under:
"In the present case, after examining the balance-sheet of the assessee, a finding of fact has been recorded that the funds utilized by the assessee being mixed funds, therefore, the interest paid by the assessee is also an interest on the investments made. Such being a finding of ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 8 fact, we do not find that any substantial question of law arises for consideration of this Court.
After going through the records and applying the principle of apportionment, which is held to be applicable in such cases, we do not find any merit in Civil Appeal No. 1423 of 2015, which is accordingly dismissed."
12. It i s evi dent f r om t he abo ve t hat t he i s s ue bef or e t h e Hon' bl e Apex C our t w as not w het her t h e pr es umpt i on t heor y w oul d appl y or not w her e t her e ar e mi xed f unds and t he as s es s ee had demo ns t r at ed avai l abi l i ty of s uf f i ci ent own f unds f or maki ng the i nves t ment s . N o di s cus s i on on t his as pect has al s o been done by t he Hon' bl e Apex C our t and mer el y not i ng t hat t he as s es s ee had ut i l i z ed mi xed f unds , t h e Hon' bl e Apex C our t hel d t hat t he pr i ncipl e of appor t i onment w oul d appl y. Wi t ho ut any di s cus s i on or del i ber at i on on t he pr es umpt i on t heor y, t he pr opos i t i on l ai d dow n i n t he cas e of Avon C ycl es L t d. (s upr a) b y t he Hon' bl e Apex C our t has t o be r es t r i ct ed t o t he ext ent of t he i s s ue bef or e t he Hon' bl e Apex C our t and f acts bef or e i t and not beyond t hat . And on t hat bas i s t he deci s i on of t he Hon' bl e Supr eme C our t i n t he cas e of Avon C ycl e s L t d. (s upr a) can be r ead onl y t o t he ext ent of uphol di ng t he pr i nci pl e of appor t i onment of expens es i ncur r ed i n t he cont ext of t he l i mi t ed f act of mi x e d f unds avai l abl e w i t h as s es s ee an d no f ur t her . T he pr opos i t i on l ai d dow n cannot be s t r et ched even l ogi cal l y t o addr es s t he f act s i tuat i on w her e s uf f i cient ow n i nt er es t f r ee f unds ar e avai l abl e w i t h as s es s ee, w hi ch f act w as not t her e bef or e t he Hon'bl e Apex cour t i n t he cas e of A von C y cl e s (s upr a ), and t o neg at e t he pr es umpt i on t hat t he ow n f unds w er e us ed f or maki ng t he i nves t ment , w hi ch w as nei t her the ques t i on r ai s ed befor e t he apex cour t and t her ef or e not addr es s ed by i t al s o.
13. Goi ng f ur t her f r om her e w e f i nd t hat t he pr es umpt i on t heoor y w as uphel d by t he Hon' bl e Supr eme C our t i n t he cas e of Her o C ycl e s Pvt . L t d. (s upr a ) w her ei n on t he i s s ue of di s al l ow ance of expendi t ur e u/ s .36 (1)(i i i ) of t he Act o n i nt er es t f r ee advan ce mad e t o Di r e ct o r s , t he Hon' bl e Ape x C our t hel d t hat i n vi ew of t he f i ndi ngs of f act t hat t he as s es s ee had s uf f i c i ent cr edi t bal ance i n i t s bank accou nt f or maki ng t he i mp ugned advan ces an d had s uf f i ci ent ow n i nt er es t f r ee f unds , t he as s es s ee compa ny coul d i n any cas e ut i l i z e t hos e f unds for gi vi ng advances t o i t s Di r ect or s . T he f i ndi ngs of t he Hon'bl e Apex C our t at p ar a 16 of t hi s or der t o t hi s ef f ect ar e as under :
" 16. Ins of ar as t he l oans t o di r ect or s ar e co ncer ned , i t coul d not be di s put ed by t he Re v enue t hat t he as s es s ee had a cr e di t bal ance i n t he bank account ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 9 w hen t he s ai d ad v ance of Rs .34 l ak hs w as gi ven. Remar kabl y, as obs er ved by t h e C IT (A ) i n hi s or der , t he company h ad r e s er ve/ s ur pl us t o t he t une of al mos t Rs .15 cr or es and, t her ef or e, t he as s es s ee co mpany coul d i n any cas e , ut i l i s e t hos e f unds f or gi vi ng advance t o i t s di r ec t or s ."
14. It i s evi dent f r om t he above t hat t he Hon' bl e Apex C our t had i n ver y cl ear t er ms hel d t hat w her e s uf f i ci ent ow n i nt er es t f r ee f unds ar e avai l abl e w i t h t he as s es s ee, t h e pr es umpt i on ar i s es t hat t he as s es s ee had ut i l i s ed t hose f unds f or t he pur po s e of maki ng i nt er e s t f r ee non bus i nes s advances . T hus i n v er y cl ear t er ms t h e Hon' bl e Apex C our t i n t he cas e of H er o C ycl es Pvt . L t d. (s u pr a) ha ve uph el d he pr es umpt i on t heor y.
15. C ons i der i ng bot h t he j udgment s of t h e Hon' bl e Apex C our t and r eadi ng and i nt er pr et i ng t hem i n t he l i ght of f act s and t he i s s ue bef or e t he Hon' bl e Apex C our t w e f i nd t hat t he j udgment s compl i ment each ot her . I n t he cas e of Avo n C ycl es L t d. (s upr a ) t he Hon' bl e Apex C our t hel d t hat i n t he f act s i t uat i on w her e mi xed f unds a r e ut i l i z ed by t he as s es s ee, t he di s al l ow ance of i nt er es t to t he ext ent t he f unds ar e ut i l i z ed f or t he pur pos e of non bus i nes s advance i s w ar r ant ed. Goi ng f or w ar d f r om t here, t he pr es umpt i o n t heor y w oul d come i nt o oper at i on i f i n t he cas e of mi xe d f unds , t he as s es see i s abl e t o demons t r at e/ es t abl i sh avai l abi l i t y of i nt er es t f r ee f unds eq ual t o or mor e t han i nt er es t f r ee non bus i nes s advanc e s / i nves t ment s t hu s r ai s i ng t he pr es umpt i on t hat t he s ame have been made out o f t he i nt er es t f r ee f unds of t he as s es s ee.
16. In vi ew of t he abo v e, w e hol d t hat t he deci s i on of t he Hon' bl e Apex C our t i n t he cas e of Avon C ycl es L t d. (s upr a) does not di s pl ace t he pr es umpt i on t heor y w hi ch has bee n uphel d by t he Hon' bl e Apex C our t i n t he cas e of Her o C ycl es Pvt . L t d. (s upr a ) a nd t he s am e s t i l l hol ds . In vi ew of t h e above, s i nce t h e L d.C IT (Appeal s ), w e f i nd, has al l ow ed t he as s es s ee's appeal d el et i ng t he di s al l owance of i nt er es t made on f i ndi ng t hat i t had s uf f i ci ent ow n i nt er es t f r ee f unds f or maki ng t he i nves t me nt , w hi ch f act has not been cont r over t e d by t he Re venu e, w e s ee no r eas on t o i nt er f er e i n t he or d er of t he L d. C IT (Appeal s ) and t he gr ound r a i s ed by t he Rev enue , t her ef or e, i s di s mi s s ed.
Respectfully following the above decision, no disallowance us 36(1)(iii) is attached in this case in the light of the decision of the Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. (supra). We, therefore, ITA No.616/Chd/2018 M/s Hype Realtors Pvt Ltd, Mohali 10 do not find any justification on the part of the lower authorities' in making the impugned disallowance and the same is accordingly ordered to be deleted.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the Open Court on 29.11.2018 Sd/- Sd/-
( बी,आर.आर. कुमार / B.R.R. KUMAR) (संजय गग / SANJAY GARG )
लेखा सद य/ Accountant Member या यक सद य /Judicial Member
Dated : 29.11.2018
"आर.के."
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar