2016 (6) TMI 1295 - AT - Income Tax

Addition of loan taken from 12 companies - disallowance of interest paid on these loans - Held that:- The addition made by the AO u/s 68 in respect of credits received by the assessee from the twelve Kolkata based companies deleted by the Ld. CIT(A) holding that their identity and creditworthiness and the genuineness of the transactions was established. - Decided against revenue

Reopening of assessment - Held that:- Where transaction itself, on the basis of subsequent information, is found to be bogus transaction, mere disclosure of that transaction at the time of original assessment proceedings cannot be said to be a disclosure of the 'true' and 'full' facts in the case and ITO would have jurisdiction to reopen even concluded assessment in such a case. The case of the assessee is still weaker as no assessment has been made in his case.

The contention of the assessee that the AO had no definite material or information before invoking provisions of sect ion 147 is not tenable. It is an admit ted fact that the original return of the assessee was processed u/s 143(1)(a) only at ministerial staff level and no finding had be en o r e v en can be recorded, by the AO during such processing, about the genuineness of loan transactions constituting the reasons for issue of notice u/s 148. The AO was therefore, fully justified in invoking provisions of section 147, as has been held by the Apex Court in ACIT v Rajesh Jhaveri Stock Brokers P Ltd.(2007 (5) TMI 197 - SUPREME Court) . There is thus absolutely no merit in the assessee's contention challenging the reopening of assessment u/s 147 and issue of notice u/s 148 and the same are found to be validly initiated and in accordance with law. - Decided against assessee

Disallowance of interest - Held that:- The stand alone disallowance of interest without establishing such loans to be unexplained and in-genuine in assessee own case, does not have sanctity and approval of law. - Decided against revenue

Disallowance u/s 14A - Held that:- Interest receipts in this case were much higher than interest paid and since the interest was mainly received on FDR which are required to be made for obtaining overdraft facility, the interest receipts are inextricably linked to interest payments and therefore interest received should be netted off against interest payments. The CIT(A) has given a finding that the investments made by the assessee were made out of own funds and not out of interest bearing borrowed funds. Thus in the peculiar facts of the case, the CIT(A) deleted the disallowance u/s 14A of ₹ 2,59,473/- made in respect of interest paid and restricted the disallowance in respect of expenses to ₹ 19,970/- @ .5% of the average investments. The above findings of the CIT(A) remained uncontroverted - Decided against revenue

Addition of general and RTO expenses and commission and brokerage expenses - Held that:- Assessee has submitted the details of expenses and copy of RTO expenses and general expenses before the CIT(A). The ld. CIT(A) has deleted this disallowance on the ground that when defects are not pointed out in these expenses and when the assessee is a Public Limited Company, there is no reason to disallow the same expenses. Therefore, the ld. CIT(A) has deleted this disallowance. During the course of hearing, the ld. Authorized Representative for the assessee did not point out any contrary evidence against the finding of the CIT(A).- Decided against revenue

Deduction on account of bad debts actually written off in its books of accounts - Held that:- On similar claim of bad debts made by filing the revised return for immediately succeeding year i.e. AY 2011-2012 has been accepted in the assessment proceedings for that year and also considering the legal position, we hold that the CIT(A) has rightly allowed the said claim

Addition on account of conveyance expenses and repair and maintenance expenses - Held that:- AO has not given any specific instance where the expenses are not supported by vouchers or bills, but at the same time, the assessee has also not produced any complete vouchers/bills to prove that the same are completely and properly maintained. The assessee maintained regular books of accounts and are subjected to audit, but personal element in incurring these expenditure have to be ruled out. Therefore, the ld. CIT(A) has restricted to ₹ 25,000/- each for conveyance and repairs & maintenance expenditure. The CIT(A) has partly allowed the appeal. Therefore, our interference is not required.