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2013 (2) TMI 66 - AT - Income TaxDisallowance of interest expense - Interest free advances to associate concerns Held that:- As concluding from the fact of the case what was given by the assessee to its associate concern was a total sum of Rs.4.42 crores for A.Y. 2005-06. Out of the said amount a sum of Rs.1.55 crore pertained to the deposits given to various directors and related parties as advance against office premises which was utilized by the assessee for the purpose of business. Therefore disallowance sustained only to the extent of interest pertaining to interest free loans and advances In favour of assessee Disallowance of interest expense Interest on borrowed fund - Interest free advances to associate concerns Assessee contended that they have enough interest free funds Held that:- Following the decision in case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. Share capital and share application money can well be said to be available as own funds with the assessee and it cannot be said that since it was utilized in the assets, it lost its character of own funds Delete the addition In favour of assessee Addition on account of excess amortization - assessee has purchased video rights / other copy rights - 100% cost of such rights, if any part of such right is sold during the year, are claimed as revenue expenditure as per accounting method consistently adopted A.O. argued that assessee has not valued the pendancy of rights as its closing stock, therefore, the cost to the extent it could be allowed should be restricted to the sale receipts on partial sale of total bundle of rights A.O. after reducing the revenue received by the assessee against those rights has added the balance amount to the income of the assessee Held that:- Without properly valuing the opening as well as closing stock of the assessee, the AO could not adopt such course of action. As decided in case of Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME COURT) that if the expenditure has been laid out or expended wholly and exclusively for the purpose of making or earning income, the allowability thereof is not dependent upon the making or earning income. The portion of bundle of rights which were standing on 1st Day of the relevant accounting year has not been taken into consideration, similarly closing stock has not been valued probably on account of difficulty to be faced in this respect - In favour of assessee
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