Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 315 - ITAT KOLKATAAddition on Interest income - accrual of interest on the money advanced - Held that:- This issue is squarely covered by the decision of State Bank of Travancore Vs. CIT [1986 (1) TMI 1 - SUPREME Court] wherein Hon’ble Court had accepted the preposition that if the financial condition of the debtor had deteriorated and from the history of its accounts, the recovery of the principal amount had become improbable and extremely doubtful rendering the “sticky” advances and as such interest thereon though debited to them following accrual system of accountancy, the alleged interest income would not be taxable in the hands of the assessee because it is a hypothetical income and not a real income. In the light of this decision, if we examine the facts of the present case, then it would reveal that as far as loan given to M/s. S.S Industries Ltd are concern, these were given in the year 1990. The debtor has paid interest upto 1992, but thereafter stopped payment. The assessee has not recognized interest income from assessment year 1997-98, by that time more than three years have already been expired. Thus, alleged interest income cannot be assumed and deserves to be deleted As far as loan given to M/s. Khaitan Hostombe Spinels Ltd is concern, this loan was given on 08-07-1996. It is also in the same assessment year. The evidence produced by the assessee relates to the AY 2003-04. In AY 1997-98, it cannot be assumed that recovery of the principal amount was doubtful. Therefore, the assessee ought to have recognized the interest income on this loan. The ground of assessee regarding challenging of addition on account of interest on loan given to M/s. Khaitan Hostombe is concern, this ground is rejected in both years. The order of the ld.CIT(A) on this issue is confirmed. Disallowance of depreciation - no manufacturing activity was carried out in the asssessee’s factory premises - Held that:- AO has not brought any evidence on record suggesting that the assessee has closed down its business during the years under consideration. If there is temporary suspension in the manufacturing activity, then depreciation on the factory building cannot be denied. Therefore, we allow this ground of the appeal in both years and delete this addition of ₹ 20,321/- and ₹ 18,992 towards claim of depreciation - Decided in favour of assessee. Disallowance of travelling & conveyance - Held that:- merit in this ground raised by the assessee because the assessee has failed to establish that this expenditure were incurred only and exclusively for the purpose of the business of the assessee. This issue of assessee’s appeal is liable to be dismissed. - Decided against assessee.
|