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Rakesh Kumar Agarwal, Kanpur vs Astt. Commissioner Of Income Tax-3, ... on 22 February, 2018 cites

Smt. Chanchal Katyal vs Commissioner Of Income Tax on 16 October, 2006

4. We have heard the rival parties and have gone through the material placed on record. As regards the first issue of disallowance u/s 36(1)(iii) of the Act, we find that the assessee is having a capital of Rs.1,68,25,925/- which is apparent from the copy of capital account of the assessee placed at page No. 17 of the paper book. Against this interest free capital of the assessee, the amount of interest free advances are only to the extent of Rs.22,45,078/-. Since the interest free own funds of the assessee far I.T.A. No.41/Lkw/2017 4 Assessment Year:2012-13 exceed the interest free advances, the disallowance u/s 36(1)(iii) was not warranted in view of various judicial pronouncements relied on by Learned A. R. Hon'ble Allahabad High Court in the case of Smt. Chanchal Katyal vs. CIT [2008] 298 ITR 182 (All) has held as under:
Allahabad High Court Cites 7 - Cited by 13 - Full Document

Commissioner Of Income Tax-I Ludhiana vs M/S Kapsons Associates Investment (P) ... on 4 August, 2015

2. At the outset, Learned A. R. submitted that learned CIT(A) had confirmed an addition of Rs.2,02,057/- being notional interest on alleged interest free advances given by the assessee without appreciating that the advances were given out of own funds of the assessee. It was submitted that the assessee had advanced a loan of Rs.21,45,078/- to his daughter and further amount of Rs.1,00,000/- was advanced to the HUF of the assessee. It was submitted that there was no nexus between the borrowed funds and the advances given to the above persons as the assessee's own funds were sufficient to cover the above interest free advances. Our attention was invited to page No. 17 of the paper book where a copy of account of proprietor's capital account was placed and it was submitted that the assessee had a capital of Rs.1,68,25,925/- whereas the interest free advances given by the assessee were quite insignificant as compared to assessee's own capital. It was submitted that during the year itself the assessee had earned a net profit of Rs.21,95,000/- as is apparent from the copy of capital account itself. Reliance in this respect was placed on the case of Smt. Chanchal Katyal vs. CIT 298 ITR 182 (All) and in the case of CIT vs. Kapsons Associates 381 ITR 204 (P&H) for the proposition that I.T.A. No.41/Lkw/2017 3 Assessment Year:2012-13 where the own funds exceed the non interest bearing advances, no disallowance can be made u/s 36(1)(iii) of the Act.
Punjab-Haryana High Court Cites 0 - Cited by 60 - Full Document
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