- (1.) The delay in re-filing the appeal is condoned.
(2.) This appeal has been filed by the appellant-assessee under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 31.10.2008, Annexure A.4 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (in short, "the Tribunal") in ITA No.724/2008, for the assessment year 2004-05, claiming following substantial question of law:- " Whether in the facts and circumstances of the case, the ITAT was right in law in upholding the disallowance on account of interest claimed under Section 36(1)(iii) of the Income Tax Act, 1961 in view of the ratio of the Hon'ble Supreme Court in the case of S.A.Builders vs. CIT, 2007 288 ITR 1 -
(3.) A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The appellant-assessee filed its return for the assessment year 2004-05 declaring a loss of Rs. 38,28,164/-. The return was selected for scrutiny. The Assessing Officer disallowed the amount of Rs. 45,14,373/- on account of interest claimed under section 36(1)(iii) of the Act vide order dated 28.11.2006, Annexure A.1 by holding that the assessee had given interest free advances of an amount of Rs. 6,94,51,894/- to its sister concern. The Assessing Officer without ascertaining the use of these funds by the sister concern disallowed the proportionate amount of Rs. 45,14,373/- under Section 36(1)(iii) of the Act. Subsequently, an order dated 20.9.2007, Annexure A.2 was issued under section 154 of the Act by the Assessing Officer rectifying the order dated 28.11.2006 by withdrawing the claim of depreciation and business loss which had been adjusted for the assessment year 2003-04. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] claiming that the advances made to the sister concern were not out of interest bearing funds and the same could not be disallowed. The CIT(A) rejected the contention of the assessee following the judgment of this Court in CIT vs. Abhishek Industries, 2006 286 ITR 1 and dismissed the appeal vide order dated 9.6.2008, Annexure A.3. Still not satisfied, the assessee filed appeal before the Tribunal. The Tribunal dismissed the appeal vide order dated 31.10.2008, Annexure A.4. Hence the instant appeal by the assessee.;