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2012 (7) TMI 68 - AT - Income TaxDisallowance in respect of interest u/s 36(1)(iii) - assessee submitted that the advances were given to protect the investment of the company as well as directors, the interest relating to advance to this party is need to be allowed - Held that:- As per the balance-sheet available against shareholders funds of ₹ 872.96 lakh, losses is of ₹ 4492.25 lakhs. Hence, no interest free fund is available with the assessee-company, so interest bearing borrowed funds were used for giving interest free advance. Therefore, no infirmity into the order passed by Ld. CIT(A) as the explanation offered by the assessee with regard to advance is not convincing as what was the commercial expediency for making such advances, when the assessee, itself has to pay interest on the borrowed capital - against assessee. Charging of Minimum Alternate Tax and not allowing deduction u/s. 115JB - Assessee contested that it is sick company as declared by the BIFR - Held that:- As the appellant filed a reference with BIFR on 11-4-2000 and the decision to file the reference was taken in company’s Board of Directors Meeting held on 17-2-2000. As the first reference of the company was dismissed as time barred by the Board vide order dt. 26-11-2002, and on 8.11.2005 AAIFR remanded the case back to BIFR to consider the case of the appellant. Thereafter the appellant filed another reference on 17.3.2003 in the BIFR. Then the order of BIFR dated 4.1.2006, it was held that the company had become a sick company. The effective date from which the company has been declared as sick has not been mentioned - case is remitted back to the file of CIT(A) directing assessee to establish the effective date when it became sick as per the order of BIFR. Addition of deferred tax for working out book profit u/s. 115JB - Held that:- Since there is retrospective amendment in this regard, this issue is decided against the assessee. Claim of process loss by assessee - Held that:- As appellant has produced the stock registers shown day to day purchase, consumption, production, opening and closing stock duly certified by the Civil & Supply Department along with books of accounts and no defects have been pointed out, the same is allowed and the consequent addition made by the A.O is deleted - process loss has been allowed upto 2% by the A.O in A.Y. 1996-97 to 1998-99 and has been allowed in full as claimed by the appellant by the ITAT for A.Y. 1987-88 to 1995-96, the process loss claimed by the appellant at 1.61% is found to be within the reasonable limit - in favour of assessee. Deletion of disallowance of interest expenses u/s 36(1)(iii) by CIT(A) - Held that:- As the fresh advance has been given to Metal Form Industries for business consideration as the assessee was purchasing tins from the said concern for filling oil.Therefore, CIT(A) has returned a categorically finding that the advance has been given for business consideration - in favour of assessee. Disallowance of various expenses on estimate basis - Held that:- As AO as well as CIT(A) has made this addition merely on the basis of estimation, this ground of assessee’s appeal is remitted back to the file of Assessing Officer to verify the claim - in favour of assessee by way of remand. Rejection of books of account - Held that:- As the assessee failed to get its account audited u/s 44AB and explanation offered by the assessee is not convincing, no infirmity into the order passed by CIT(A)confirming the action of AO in respect of rejection of books of account - decided against the assessee.
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