TMI Blog1992 (11) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... count of bad debts amounting to Rs. 4,45,219 in asst. yr. 1984-85 and Rs. 2,88,109 in asst. yr. 1985-86. The assessee filed copies of the ledger accounts of the various debtors and also the correspondence in some cases with the said parties. In asst. yr. 1984-85 the assessee also placed on record the legal opinion of a lawyer who advised that it was useless for the assessee to go to the Court of law since that would not serve any useful purpose and the assessee in fact was advised to take up the matter with Motion Pictures Association. It appears that the said Association later on passed resolutions directing some of the debtors to make payments to the assessee. The AO also took note of the fact that most of the claims related to the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Andhra Pradesh High Court in the ultimate analysis opined that the matter was required to be re-examined by the AO as follows: "In my view the entire claim has not been properly analysed by the IAC (Asst.). In the case of distributors the Motion Picture Associations or other trading bodies play an important role in matters where dispute arise. That the appellant should have taken the matter to the Civil Courts or with the Motion Picture Association is a decision best left to the appellant as he alone could have been in a position to decide better course of action. In the case of Universal Films wherein the amount of Rs. 1,66,150 is claimed the appellant has produced before me a letter dt.9th Dec., 1988from M/s Ramnord Research ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only other common ground in both these appeals is the one pertaining to the disallowance/addition made out of interest paid on the ground that funds borrowed on interest had been diverted to "connected concerns" interest-free. The AO made a disallowance of Rs. 89,350 in asst. yr. 1984-85 and Rs. 96,490 in asst. yr. 1985-86 vis-a-vis the amount advanced to M/s Gymkhana Service Station and M/s Jyoti Shipping (P) Ltd. the assessee being a partner in the first and a Director in the latter. In making the aforesaid additions/disallowance the AO followed his order for asst. yr. 1983-84 wherein also the aforesaid two parties were involved. On further appeal, however, the CIT(A) deleted the additions for both the years taking note of the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to asst. yr. 1983-84. In support reliance was placed on the "decision of the Hon ble Allahabad High Court in the case of CIT vs. H.R. Sugar Factory (P) Ltd. (1990) 87 CTR (All) 132 : (1991) 187 ITR 363 (All) and that of the Hon ble Bombay High Court in the case of CIT vs. Bombay Samachar Ltd. (1969) 74 ITR 723 (Bom). 9. The learned counsel for the respondent, on the other hand, supported the orders passed by the CIT(A) for both the assessment years under appeal. It was stated that adequate funds vis-a-vis the amounts standing to the accounts of the sundry creditors were available with the assessee and these had been diverted to the connected concerns free of interest. As regards the amount due from M/s Jyoti Shipping (P) Ltd., it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be disallowed/added since these continued to remain with the debtors. In support he placed reliance on the decision of the Hon ble Madras High Court in the case of CIT vs. Tamil Nadu Industrial Development Corporation Ltd. (1991) 189 ITR 670 (Mad). 11. We have examined the rival submissions and have also perused the material on record to which our attention was invited by the parties. At the outset, we may mention that in asst. yr. 1983-84 the Tribunal in ITA No. 6009 (Del) of 1986 r/w M.A. No. 15 (Del) of 1992 has taken a view that the funds which were advanced to M/s Gymkhana Service Station and M/s Jyoti Shipping Pvt. Ltd. came out of the monies borrowed by the assessee on interest. This is a factual finding. The Tribunal has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im for deduction of interest paid was allowed on the ground that amounts advanced were not out of borrowed funds. The tax authorities in one of the subsequent assessment years and which was the subject-matter of the question referred to the Hon ble High Court took the view that the entire amount outstanding on the last day of the year which included the opening balance was liable to be taken into account for computing the disallowance. The Tribunal took the view that the opening balance was not liable to be included since the view taken in the preceding assessment year was that funds advanced were not out of those which had been borrowed at interest and it was only the fresh borrowals during the assessment year under consideration which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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