Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (11) TMI 94 - AT - Income TaxAddition on the ground that cheques which had issued by the assessee and which had not been encashed – alleged that assessee had disputed the liability for payment of this amount, it could not be taken that the liability to pay had arisen during the year under consideration – Held that:- Payment had been stopped because of inferior quality of work - there is no scope for disallowing the part payment only because there is a dispute about the quality of the work. If any remission against the liability received by the assessee, the same would be required to be offered for tax under the provisions of section 40A(1) of the Act - addition deleted Disallowance of interest – alleged that money was advanced by the assessee to M/s Girnar Fabrics Ltd., knowing fully well that the financial posit ion of M/s Girnar Fibres was not good and the partners of the assessee firm, being Director in the company, were aware of the financial position of the company – Held that:- Assessee company appears to have left the money with the company without any good reason and without utilizing that money to pay for the purchases made for that company - assessee has not established the commercial expediency - uphold the disallowance of interest made against the outstanding interest free loan - disallowance on this account in the asstt years 2005-06 and 2007-08 has been made @ 13.5% by the AO - disallowance @ 21% does appear to be very steep and is not supported by showing that this was the cost of the funds borrowed by the assessee - direct the AO to recomputed and to limit the disallowance on account of interest for interest free loan given - rate of interest is required to be reduced to 10% Notice – limitation – appellant contended that the assessment order was passed on 01.01.2007. It was contended by the appellant that since the assessment order was received by it on 01.01.2007, it was also passed on the same date – Held that:- Assessment order was signed on 18-12-2006 and the mere fact that a copy was received personally by some person on 1-1-2007 does not detract from this fact - In the remand report the AO has no where stated that the order was passed on 31-12-2006. What she had stated is that the order was passed " by 31-12-2006" since the same had been served on 1-1-2007. The Act requires the assessment order to be passed by the date of limitation - documents in record show that the order was passed on 18-12- 2006 and was dispatched on 30-12-2006 by speed post, in addition to being served by hand on 1-12007. Hence, the appellant’s contention that the assessment is barred by limitation is rejected
|