(Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) 1.0 The Revenue has preferred the present appeal under section 260A of the Income Tax Act, 1961 to challenge the order dated 26.11.2010 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' in ITA No.3563/Ahd/2007, proposing the following question formulated in the memorandum of appeal as substantial question of law.
"[A] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.5,15,689/- made on account of interest free loan and advances?"
2.0 We have heard learned advocate Ms. Mauna Bhatt for the appellant. We have also gone through the impugned order and the relevant material on record.
3.0 The issue urged in the appeal is in respect of addition of Rs.5,15,689/- made by the Assessing Officer in the income of the assessee for Assessment Year 2004-05 in respect of interest expenses. That addition came to be deleted by the Commissioner (Appeals) and that deletion was confirmed by the Income Tax Appellate Tribunal in its order impugned.
3.1 The Assessing Officer did not accept the explanation of the assessee about the advances given to different parties and the nature of such advances. The Appellate Commissioner took a view on the basis of copies of the accounts of the various parties which were submitted in the assessment proceedings that the advances were business advances. From the assessee's balance sheet, he noticed that the share capital was Rs.4,09,20,000/- and the reserves & surplus was Rs.7,91,97,136/- totaling Rs.12,01,17,136/-, and that the interest free loan given by the assessee was Rs.45,05,003/-, therefore, the assessee had sufficient interest free funds available with it. After discussing the various judgments on the aspect involved, the Commissioner deleted the disallowance made by the Assessing Officer.
3.2 The Income Tax Appellate Tribunal confirmed the deletion made by the Commissioner (Appeals) and after taking into account the figures of share capital and reserves & surplus vis-à-vis the total interest free advances, held that -
"......the Learned CIT(Appeals) has given a finding that as per the balance-sheet, the share capital was to the tune of Rs.4,09,20,000/- and surplus reserves was Rs.7,91,97,138/-. As per Assessee, the total interest-free funds available were Rs.12,01,17,138/-. As against that, advances alleged to be interest-free were to the tune of Rs.45,05,003/-. In the light of this background, now before us a decision of Reliance Utilities & Power Ltd. placed on record, reported as 313 ITR 340 (Bom.). Once the Hon'ble Court has taken a view that the assessee possessed sufficient interest-free funds of its own, then the presumption stands established that the investment towards alleged interest-free funds were out of the available interest-free reserves. It was held that no part of interest on borrowings should be disallowed on the basis that the investments were made out of interest-bearing funds. Following this precedent we hereby affirm the findings of Ld. CIT(A)"
4. The Tribunal has worked its findings on the basis of and by considering the figures in the books of account of the assessee, which in other words are the findings in the realm of appreciation of facts. The finding that the assessee had enough interest free funds of its own was a finding of fact. It was on that premise that the deletion of disallowance of interest amount was held justified by the Tribunal. The Tribunal's findings and decision are proper in the facts of the case and are based on consideration of facts and material on record. Under the circumstances, no substantial question of law arises for consideration of this Court. The present appeal is, therefore, not liable to be entertained.
5. Accordingly the appeal is dismissed.
[V.
M. SAHAI, J.] [N.
V. ANJARIA, J.] Amit Top