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2021 (3) TMI 19 - AT - Income TaxUnexplained cash credit u/s 68 - difference between the outstanding liabilities shown in the name of M/s New India Roadways as per the assessee’s books and as per the books of account maintained by the concerned party - Addition of evidence of additional evidences - HELD THAT:- As assessee has furnished certain information from the website of the MCGM by way of additional evidence to emphasize that ₹ 20 lakh which is the subject matter in dispute is, in reality, the earnest money deposit with MCGM. I have noticed, before the first appellate authority the assessee had also submitted that the amount of ₹ 20 lakh shown as liability due to M/s New India Roadways is because of a clerical mistake. However, the first appellate authority has not given any credence to such statement of the assessee. Assessee as well as the additional evidences now furnished which, have a crucial bearing in deciding the issue; hence, should be admitted, assessee’s claim that the disputed addition of ₹ 20 lakhs actually represents the earnest money deposit with MCGM requires thorough examination. Since, evidences now furnished before the Tribunal were not filed before the departmental authorities, in my view, the issue needs to be remitted back to the Assessing Officer for examining assessee’s claim vis-à-vis the additional evidences filed by the assessee as well as the evidences already on record. Accordingly,restore the issue to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. Disallowance of the interest expenditure claimed during the year - assessee has claimed deduction towards interest paid on loans availed - HELD THAT:- Though, it may be a fact that the assessee had availed loan at the interest rate of 12% p.a., whereas, it has advanced loan to a sister concern by charging 9% interest p.a; however, assessee’s contention that it is a temporary advance of surplus funds available and was given on the condition that it has to be repaid on call, has not been disputed or denied. The assessee’s claim that the rate of interest charged at 9% is more than the prevailing rate of interest on FDRs has not also been found to be false. In such circumstances, if the assessee has parked his surplus fund temporarily by charging interest at 9%, which is more than prevailing rate of interest on FDR, the interest so charged cannot be held to be unreasonable. Therefore, disallowance made out of the interest expenditure is uncalled for. Accordingly delete the disallowance. Disallowance made out of sales promotion and travelling expenses - HELD THAT:- Undisputedly, the part disallowance of sales promotion and travelling expenses has been made purely on ad hoc basis alleging non furnishing of complete evidence. Considering the nature of expenditure, it may not be possible on the part of the assessee to maintain the details of all the expenditure incurred on sales promotion and travelling. In view the possibility of inflation of expenditure by the assessee to some extent, in my considered opinion, disallowance of @20% out of the aforesaid expenditures would be fair and reasonable. Accordingly, I direct the AO to restrict the disallowance to 20% of the expenditure claimed towards sales promotion and travelling. This ground is partly allowed.
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