IN INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. B. R. BASKARAN, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 348/Asr/2018 Assessment Year: 2014-15 M/s K.C. Educational Social vs. Deputy Commissioner of Welfare Society, Income Tax, Circle-II, Jalandhar Village Pandoga, Una (HP) [PAN: AAJFK 4479Q] (Appellant) (Respondent) Appellant by : Written submissions Respondent by: Sh. M. P. Singh CIT, D.R. Date of Hearing: 22.08.2019 Date of Pronouncement: 22.08.2019 ORDER Per B. R. Baskaran, Accountant Member: appeal filed by assessee is directed against order dated 17-04- 2018 passed by Ld CIT(A)-5, Ludhiana and it relates to assessment year 2014- 15. 2. assessee is aggrieved by decision of Ld CIT(A) in confirming addition of interest income computed on interest free advances given by assessee. 3. assessee has moved letter seeking adjournment of matter. However, considering issue involved in this appeal, we reject adjournment petition and proceed to dispose of appeal. 2 ITA No. 348/Asr/2018 (AY 2014-15) K.C. Educational S. W. Society v. Dy. CIT 4. We heard Ld DR and perused record. 5. assessee is educational society and it filed its return of income declaring nil income. AO noticed that assessee has given advance to tune of 180.98 lacs to its sister concerns at free of interest. AO noticed that assessee has borrowed funds from banks and was paying interest. Accordingly AO took view that assessee should have charged interest on advances given to sister concerns. In this regard AO has placed this reliance on decision rendered by Hon ble Punjab & Haryana High Court in case of CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1. Accordingly, he computed interest on above said advance at rate of 18% which worked out to Rs.32.57 lacs. Ld CIT(A) granted partial relief to assessee. Still aggrieved assessee has filed this appeal before us. 6. We heard Ld DR and perused record. We noticed that assessee has contended before Tax Authorities that own funds and interest free funds available with assessee are in far excess of amount of interest free advance given to sister concerns. Accordingly it was contended by assessee that addition of interest income is not called for, since presumption is that own funds have been used for giving interest free advances. 7. We noticed that above said contention of assessee has been rejected by Tax Authorities on reasoning that assessee has failed to show nexus between interest free funds and advances. However we noticed that contention of assessee gets support from decision rendered by Hon ble Supreme Court in case of Reliance Industries Ltd. (Civil Appeal No. 37 of 2019 dated 02.01.2019). Accordingly we are of view that this issue requires examination by duly applying ratio of decision of Hon ble Supreme Court referred 3 ITA No. 348/Asr/2018 (AY 2014-15) K.C. Educational S. W. Society v. Dy. CIT above. Accordingly, we set aside order passed by Ld CIT(A) and restore this issue to file of Assessing Officer with direction to examine this issue afresh in accordance with decision rendered by Hon ble Supreme Court in above cited case. 8. In result, appeal filed by assessee is treated as allowed. Order pronounced in open court on August 22, 2019 Sd/- Sd/- (N. K. Choudhry) (B. R. Baskaran) Judicial Member Accountant Member Date: 22.08.2019 /GP/Sr. Ps. Copy of order forwarded to: (1) Appellant: (2) Respondent: (3) CIT(Appeals) (4) CIT concerned (5) Sr. DR, I.T.A.T True Copy By Order K.C. Educational Social Welfare Society v. Deputy Commissioner of Income-tax, Circle-II, Jalandhar