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TMI Blog2013 (7) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the Tribunal was correct in confirming the order of CIT(A) in deleting the disallowance of Rs.76.76 lacs made by the Assessing Officer under Section 36(1)(iii) of the Income Tax Act? B) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in confirming the order of CIT(A) in deleting the disallowance of Rs.92,91,343/- made by the Assessing Officer on account of prior period expenses? 3) Regarding Question-A :- (a) The Respondent-assessee filed its return of income for assessment year 2004-05 declaring a total income of Rs.100.76 crores. During the course of the assessment proceeding the Assessing Officer noted that the respondent had earned dividend income amount of Rs.63. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. In view of the above, the CIT(Appeals) held that no amount of interest paid can be disallowed as no amount which was borrowed was invested in mutual funds. (c) The Revenue carried the matter in appeal to the Tribunal. The Tribunal upheld that finding of fact arrived at by the CIT (Appeals) and held that no part of the borrowed funds of Rs.30 crores was utilized to make the investment in mutual funds. Further reliance was placed upon the decision of this Court in the matter of CIT vs. Reliance Utility and Powers Limited reported in 313 ITR Page 340 wherein it has been held that where interest free funds were available with the assessee, the presumption has to be that investments have been made out of such interest free funds and not ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest free funds were available with the assessee, the presumption has to be that investment was made out of such interest free funds. There is no requirement under the law that an assessee should have separate account in respect of non interest bearing funds from that of interest bearing funds to establish that the investments have been made out of its own funds i.e. non interest bearing funds. In view of the above, we see no reason to entertain Question A as the same is based on finding of fact and on facts found is covered by the decision of this Court in the matter of Reliance Utility (supra) in favour of the Respondent assessee and against the Appellant-revenue. 4) Regarding Question B : (a) In its return of income for assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and accepted by the Revenue the prior period expenses which were crystallized during the assessment year under consideration, on receipt of the bills are to be allowed as an expenditure. (c) On further appeal by the revenue the Tribunal upheld the finding of fact arrived at by the CIT(Appeals) and held that prior period expenditure was claimed in respect of the bills received during the assessment year 2004-05, even though the work/services was received in an earlier year. This has been consistent practice followed by the respondent-assesses according to which the liability is to be accounted when the bills are received and the payments made in the subsequent year. Thus the appeal of the Respondent-assessee was allowed. (d) The R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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