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 748 - AT - Income TaxAddition due to Loss on Investment – purchase of mutual funds / units in the name of director - Board's Resolution authorizing investment in the names of various directors - held that:- Assessee has shown the mutual funds as its investment. Therefore, there was no suppression of the fact with respect to investment as doubted by A.O. Further, there is no bar for the assessee company to make investments in the name of the directors due to certain strategic reasons. The assessee has submitted the Board’s resolution duly certified by one of the directors of the company granting such permission for investing in mutual funds in the names of the directors of the company which cannot be simply brushed aside - addition made by. A.O. on account of loss claimed by the assessee for Rs.80,77,500/- is not justifiable and therefore same is deleted - Ground of appeal is allowed. Diversion of Interest bearing funds – held that:- Interest bearing funds are not diverted for making investments in mutual funds, proper cash flow statements have to be prepared before such diversion of funds and examined. Further, from examination of the balance-sheet, it is evident that the assessee does not have own funds to make such investments because the share capital and reserves of the assessee as shown on 31.03.2000 in the balance-sheet of the company is only Rs.1,35,000/- and Rs.97,185/- respectively. Therefore, it is evident that the assessee has diverted the interest bearing funds for making such investments. Further the working of. AO that interest to the extent of Rs.17,32,449/- is attributable to interest on funds diverted is not disputed by the assessee’s A.R - CIT(A) is justified in confirming the addition. Order of AO and CIT(A) on this issue is confirmed - Ground of appeal is dismissed - In the result, appeal of the assessee is partly allowed.
|