Judgment:
1. This appeal by Revenue for asst. yr. 1990-91 is directed against the order of CIT(A), Jodhpur, dt 24th March, 1994.
2. We have heard the arguments of both the sides and also perused the records including the written statement of learned authorised representative of assessee placed on record.
3. The sole ground raised by the Revenue disputes the deletion of addition of Rs. 1,06,118 on account of interest of funds advanced to assessee's wife without interest. The learned Departmental Representative of Revenue has contended that the assessee did not charge interest from his wife on advances made to her, although the assessee had been charging interest from his wife in earlier years. He has contended that the AO, therefore, rightly disallowed proportionate interest payable by assessee to his creditors. In this regard, he has referred to para 10 on p. 17 of AO. He has relied on order's of AO. As against this, the learned authorised representative of assessee has relied on his written statement and contended that the assessee had his own enough interest-free funds, and that no nexus between the interest-free loan to the assessee's wife and interest-bearing' borrowings by assessee has been established. He has referred to the chart available on p. 5 of his written statement and contended that even in most of the earlier years the assessee had not charged interest from his wife but had charged interest only in two years being asst.
yrs. 1988-89 and 1989-90. He has contended that the assessee's wife is proprietor of M/s Frig Corporation of Rajasthan, and the assessee is a, contractor and doing job work of installation of water cooler, etc. He has contended that the assessee's wife is also a trade debtor and that the assessee is not charging interest from any other trade-debtor as well. It is also been contended that in the assessee's written statement that this account of Frig Corporation (of assessee's wife) is existing even prior to 31st March, 1984, He has contended that the assessee took two fresh borrowings during the year under appeal and utilized the fresh borrowings for purchasing truck through back finance which is verifiable from balance sheet and bank loans. It has also been contended that assessee's own capital at the beginning and at the end of the year was Rs. 2,79,810 and Rs. 97,566, respectively, and so the availability of non-interest bearing funds of assessee's own were sufficient and thus there was a complete absence of nexus. It has also been contended that besides assessee's own interest-free capital being available, the assessee was having substantial non-interest bearing funds obtained from third parties, being to the tune of Rs. 4,89,017 as detailed on pp. 6 and 7 of the written statement.
4. We have considered the rival contentions, as also the relevant material on record. From the perusal of record we find that the assessee had sufficient interest-free capital of his own as also interest-free funds obtained from third parties to cover debts of assessee's wife. It is also revealed from record that these debts were trade debts and that the assessee's plea has been that the assessee had not been charging interest from any other trade debtor also. In the circumstances, considering all the facts and circumstances of the case, we find no justification for disallowing/adding proportionate interest on the basis of non-charging of interest by assessee from assessee's wife. In that view of the matter we find no fault with the impugned order of learned CIT(A) in deleting the addition/disallowance of the aforesaid interest. We, therefore, decline to interfere with the same.