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2021 (12) TMI 933 - ITAT DELHIAddition u/s 68 - unexplained sundry creditors - outstanding balance at the year end appearing against two related party as being unexplained - HELD THAT:- Allegation of the AO that the financial statement of the sundry creditors do not support the creditworthiness, is not based on proper appreciation of the facts more so for the reason that the sundry creditors had purchased goods during the year under consideration from different parties and out of those goods purchased it had made sale to the assessee which was as per general business practice - allegation of the AO that M/s. Mandal Superfine Garments Pvt. Ltd. and M/s. Vikas Superfine Garments Pvt. Ltd. do not have creditworthiness to enter into large transaction of sale and purchase is factually incorrect - also noted that the transactions of purchases made by the assessee from its sister concern was at Arm’s Length Price and no adverse finding has been brought on record by the AO and the AO has never doubted the purchases made by assessee from those associated concern. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason the interfere with the order of CIT(A) and thus the Ground of Revenue is dismissed. Disallowance u/s 37(1) - assessee had claimed interest on Government dues - interest charged by the DGFT for the period upto 10.07.2014 - case of the Revenue that the interest paid by the assessee is penal in nature and therefore Explanation to Section 37 of the Act gets triggered and therefore the amount is not allowable - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given a finding that Deputy DGFT vide letter dated 24.04.2013 had asked the assessee to refund the incentive received earlier along with interest and the letter nowhere mentioned that assessee had committed any offence under Foreign Trade Regulation. CIT(A) while deleting the addition ahd also placed reliance on the decision rendered by Hon’ble Delhi High Court in the case of Enchante Jewellery Ltd. [2012 (12) TMI 169 - DELHI HIGH COURT] Before us, no material has been placed by Revenue to point out that interest paid by the assessee was on account of any act of assessee which is prohibited by law. Revenue has not placed any material on record to demonstrate that the payment is hit by Explanation 37 of the Act. Before us, Revenue has also not placed any contrary binding decision in its support not has pointed any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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