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2017 (10) TMI 67 - AT - Income TaxAddition on interest expenses on the late deposit of service tax and Tax Deducted at Source (TDS) - Held that:- The principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (1998 (3) TMI 2 - SUPREME Court) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (1997 (12) TMI 16 - SUPREME Court ) has allowed the deduction on account of interest on late deposit of sales tax u/s 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well as TDS liability are allowable expenses u/s 37(1). Addition of unexplained freight expenditure - CIT-A deleted addition admitting fresh evidences - Held that:- All the necessary reconciliation in support of freight expenses were produced by the assessee before the AO at the time of assessment proceedings. There is clear finding of the ld. CIT(A) that no subsidiary ledger in respect to freight charges was maintained by the assessee though the AO made the addition on the basis of non-production of subsidiary ledger. In the absence of any additional evidence, we do not find any reason to interfere in the order of Ld. CIT(A). Hence, this ground of Revenue’s appeal is dismissed. Addition on interest on sundry debtors - Held that:- On the perusal of assessment order, we find that no date for the payment from the sundry debtor was brought on record. There was no information available suggesting that the assessee was entitled for interest on the outstanding amount of sundry debtors. Thus, it cannot be said that the income from interest had actually accrued to the assessee during the year under consideration. The decision for the charging the interest from the sundry debtors totally depends upon the assessee. The AO cannot sit on the arm-chair of the assessee and direct for the recovery of interest on the amount of sundry debtors which are due for payment. The assessee has to consider business expediency for charging interest from the sundry debtors which are outstanding in the books. Thus, we hold that the addition made by the AO for the interest on the amount of sundry debtors outstanding in the books of account is not sustainable. Addition on account of interest on loans and advances - Held that:- Assessee was having its own capital for ₹ 8,84,73,905/- at the end of financial year under consideration. We note that the own fund of assessee was sufficient enough to make the advance of ₹ 48,13,023/- only. In this regard, Ld. DR has not brought anything contrary to the finding of Ld. CIT(A) suggesting that the borrowed has been diverted in non-business activity. Hence, we hold that there was no diversion of interest bearing fund to the non-business activities of the assessee. Accordingly we find no reason to interfere in the finding arrived by the Ld. CIT(A) Decided against revenue.
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