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2013 (6) TMI 455 - AT - Income TaxProportional disallowance of interest on advance given to sister concerns - CIT(A) deleted the addition - AY 2004-05 - Held that:- From the material on record it is quite evident that the assessee has not only given advances to its sister concerns but has also received advances from them. From the account of one of the sister concern i.e., Kedia Vanaspati Ltd., it can be seen that there is a credit balance of Rs.3,28,02,809/- with the assessee. It further reveals that the assessee had regular business transaction with its sister concern. In the aforesaid factual situation the disallowance made by the AO on allegation of diverting borrowed funds to the sister concerns is not borne out from record, hence, cannot be accepted. The assessee has business connection with its sister concerns is also suggestive of the fact that they are in the nature of trade advances only, hence cannot be considered as loans. Also contention of DR that the CIT (A) has considered additional evidence in violation of Rule 46A are irrelevant as it is evident from the order of the CIT (A) that in course of the appeal proceeding the CIT (A) in fact had sought the comments of the AO on the issue but the AO did not respond to it - Against revenue. Direction of the CIT(A) not to add disallowable interest while computing MAT - AY 2006-07 - Held that:- A reading of the provision contained u/s 115JB makes it clear that the basis for computation of book profit is the net profit as shown in the profit and loss account and which maybe increased by the items prescribed in item (a) to (i) and reduced by items (i) to (viii). Therefore any of the items which are to be added for arriving at the book profit must fall within the items specified under the explanation. Sec. 115JB being a self contained provision, one has to go strictly by the provision contained therein. Since the additions made by the AO to arrive at the book profit are outside the purview of items enumerated under explanation I to section 115JB, the computation made by the AO is legally unsustainable. Accordingly uphold the order of the CIT (A) and dismiss the grounds raised by the department.
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