Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1685 - AT - Income TaxDisallowance on account of pro rata interest on loan given to sister concern u/s 36(1)(iii) - availability of own funds - Held that:- Hon’ble Supreme Court in the case of CIT vs. Munjal Sales Corporation, [2008 (2) TMI 19 - SUPREME COURT] held that if assessee has huge interest free funds including the profit earned by the assessee during the year which is sufficient to cover the advancement of loan, then no interest should be disallowed. The assessee has demonstrated that the huge amount of money was lying in the capital of the partners and the profit earned during the relevant assessment year itself was approximately ₹ 1.19 crores. Therefore, such an availability of funds interest free is sufficient to cover up a small interest free loan of ₹ 16 lacs given to sister concern. Accordingly, the disallowance of ₹ 1,14,777/- is deleted. In the result appeal of the assessee is allowed. Rectification of mistake - Supporting manufacturers’ deduction u/s 80IB on duty drawback / DEPB allowed - Failure to apply the judgment of the Jurisdictional High Court - CIT(A) has rectified his order and has allowed this issue in favour of the department - Held that:- Following a binding judicial precedents of the Jurisdictional High Court in the rectification proceedings has been upheld by ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT), wherein held that failure to apply the judgment of the Jurisdictional High Court even rendered subsequently gives rise to a mistake apparent from records and the appellate authority has to rectify its judgment so as to bring in consonance with the judgment of the Hon’ble Jurisdictional High Court. Therefore, we hold that there is no legal infirmity by the Ld. CIT (A) in rectifying his earlier order and same is much within the scope of section 154. Thus, the appeal of the assessee on this issue is dismissed. Levy of penalty u/s 271(1)(c) - disallowance of deduction u/s 80IB; and also on account of disallowance of pro-rata interest - Held that:- The assessee’s claim of deduction u/s 80IB on Duty Drawback/DEPB at the time of filing of return was then supported by various judgments of the Tribunal which was also confirmed by the Hon’ble Jurisdictional High court as discussed in the earlier part of the order. Under these circumstances it cannot be held that the assessee’s claim at the time of filing of return of income was either not correct or was not bonafide. AO had relied upon the judgment of Liberty India vs. CIT (2009 (8) TMI 63 - SUPREME COURT) held that such a claim was not allowable even at the time of filing of return of income. However, such a reasoning is not held to be tenable, because the Hon’ble High Court in its judgment and order dated 13th May, 2008 had considered various judgments of the High Court as well as the Supreme Court in the case of CIT vs. Baby Marine Exports,(2007 (3) TMI 206 - SUPREME COURT), wherein deduction u/s 80HHC on duty drawback/DEPB in case of supporting manufacturer was allowed. Thus, it cannot be held that assessee was guilty of furnishing of inaccurate particulars of income. Such a levy of penalty of disallowance of deduction cannot be upheld and same is directed to be deleted. - Decided in favour of assessee.
|