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2012 (12) TMI 483 - AT - Income TaxDisallowance of interest paid - Held that:- It is revealed from the orders passed by AO as well as the CIT (A) that interest was ‘paid’ during the relevant previous year, thus when interest has been paid during the financial year no disallowance could be made u/s 40(a)(ia) in view of Special Bench decisions in the case of M/s. Merlyn Shipping & Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) - in favour of assessee. Unexplained credits - Held that:- The addition solely on the reasoning that cash was deposited in Smt. Indira Golechha's bank account before the loan was advanced by her to the assessee. This by itself cannot be a ground to disbelieve the advancement of loan of Rs.2,90,000/- to the assessee without making proper enquiry to find out whether the creditor had sufficient cash balance with her to advance the loan - Issue restored back to AO with a direction to make proper enquiry - in favour of assessee for statistical purposes. Excess Remuneration paid to Director - Disallowance u/s 40A(3) - Held that:- As entire amount was paid in cash in violation of provisions contained u/s 40A(3) disallowance of 20% out of the expenditure claimed is warranted - uphold the order passed by the CIT(A)- against assessee. Disallowance of capital loss - Held that:- Appeal proceeding being a continuation of assessment proceeding any omission or mistake in the assessment order can be considered by the CIT (A). The CIT (A) after examining the materials also found that the said amount is a capital loss - Addition of Rs.43,505/- is confirmed and ground raised by the assessee is rejected - against assessee.
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