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ITA no. 6327/Mum./2010

2. Considering the facts and circumstances of the case and without prejudice to ground No. 1 above, the CIT(A) erred on facts and in law in not restricting disallowance to Rs. 201420 being disallowance on same issue in earlier assessment year in the manner calculated in Annexure I."

2. The assessee is in the business of trading. The facts regarding the disallowances are brought out at Pages-2 and 3 of the assessment order. The Assessing Officer observed that the assessee has given an interest free advance of ` 13,00,383 to its sister concern M/s. Softex Manufacturing Co. as the assessee company had also borrowed funds on interest. The Assessing Officer was of the view that interest bearing funds were diverted as interest free advance to sister concern. He rejected the contentions of the assessee that interest free funds were available with it by observing that the same are already blocked / invested in fixed assets worth ` 42,96,698. Thus, he disallowed 12% of the interest paid on borrowed funds on an amount of ` 13,00,055. Aggrieved, the assessee carried the matter in appeal but without any success. Further aggrieved, the assessee is in appeal before the Tribunal.