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TMI Blog2013 (9) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the Tribunal in assessee's case. The facts and circumstances remained identical as there is no change. However, Ld. CIT DR placed reliance on the assessment order. The relevant facts of the case are that the assessee company is engaged in the business of export of processed meat products and made cash purchases as in the earlier years. In the year under consideration, the facts are found discussed in page no- 2 to 5 of the assessment order in para 4 wherein the AO makes a reference to the facts in 2003- 04 to 2007- 08 assessment years. For ready- reference they are reproduced for ready reference :- "The issue of cash purchases was also examined in the preceding years. While during the course of the assessment proceedings for the assessee had categorically submitted that the raw materials i.e carcass had been purchased through agents, as also the assessee took the plea that the purchases of raw materials i.e carcass was made directly from the growers/ farmers/ villagers. In the case of the assessee for Assessment Year 2003- 04, 2004- 05, 2005- 06, 2006- 07 & 2007- 08 the Assessing Officer invoked the provisions of section 40A(3) and disallowed 20% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the appellant's submission and have also perused the ITAT's order dated 13.08.2010 for assessment year 2007- 08 and my predecessor's order dated 04.03.2010, where both the authorities by relying on ITAT's own order for assessment year 2005- 06 and 2006- 07 in appellant's own case, have held that the cash payments made by the appellant for purchases made, falls within the clauses (f) and (i) of Rule 6DD, hence no disallowance can be made under Section 40A(3). Since in the year under consideration, there are no change in facts as were existing in assessment year 2005- 06, 2006- 07 & 2007- 08, accordingly relying on ITAT's order for those years, I am also of the view that the payment made during the year for cash purchases doesn't fall within the ambit of Section 40A(3) and thus the addition of Rs.63,24,59,802 deserves to be deleted." 5. Aggrieved by this the Revenue is in appeal before the Tribunal. 6. In the above circumstances, Ld. DR relies upon the AO. The Ld. AR filed a compilation of the orders of the Tribunal's in assessee's own case wherein Coordinate Benches vide a) order dated 26.09.2008 in ITA No- 1822/Del/2007 for 2003- 04 assessment year; b) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to show that no disallowance could be made u/s 14A as the assessee had not incurred any expenditure as the investments were made in the FYs 1995- 96, 1996- 97, 1997- 98 in which years the assessee had sufficient share capital and reserves in surplus. The loans taken from IFCI and other banks etc., in those years were towards fixed assets and towards working capital which was being monitored by the bank as the assessee was required to file monthly stock statements with the banking authorities. 10. We have heard the rival submissions and perused the material available on record. Considering the arguments advanced before the Bench at the time of hearing, the appeal was listed for clarification to show what arguments were advanced by the assessee before the AO. In response thereto, Ld. AR filed a letter dated 14.12.2010 addressed to the AO stating that no interest relates to the investment in equity shares of Hind Agro Industries. The share capital of reserves surplus of the company amounted to Rs.59,05,87,952/- and the total investment in equity shares stood at Rs.18.75 crore. It was submitted that it had been canvassed that the investment has been made out of the non- interest bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea of the appellant has duly been examined and from the perusal of financial statements for assessment years 1996- 97, 1997- 98 and 1998- 99 following facts emerge :- Particulars A.Y.1996- 97 A.Y.1997- 98 A.Y.1998- 99 Share Capital Opening Balance 5,20,65,500 5,20,73,000 7,92,59,978 Addition during the year 7,500 2,71,86,978 8,742 Reserve and Surplus Opening Balance 17,42,54,751 24,23,80,243 32,62,36,756 Add- Transferred from P and L 6,8125,492 8,38,56,513 6,11,30,970 29,44,53,243 40,54,96,734 46,66,36,446 Less- Investment in HAIL Opening Balance - - 3,00,00,000 12,37,00,000 Addition during the year 3,00,00,000 9,37,00,000 6,38,00,000 Total 3,00,00,000 12,37,00,000 18,75,00,000 Surplus of share capital and reserves 26,44,53,243 28,17,96,734 27,91,36,446 Secured Loan from IFCI for fixed assets 5,79,40,466 22,21,55,466 22,17,80,466 Less Fixed Assets Opening Balance 9,36,45,425 11,79,23,306 12,50,45,604 Addition during the year and CWIP 2,42,77,881 20,61,95,697 27,22,38,409 11,79,23,306 32,41,19,003 39,72,84,013 Secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral Reserves to the extent of Rs.46.66 crore. Whereas with no increase in Secured loans as compared to the assessment year 1997- 98 the fixed assets rose by further Rs.5.31 crore. This also shows that when own funds are used to finance the fixed assets, in such a scenario there is sufficient availability of own funds with the appellant to make investments of Rs.18,75,00,000 in the their subsidiary company. 10. During the year under consideration the AO has made the disallowance under Section 14A read with Rule 8D, amounting to Rs.78,96,366 (comprising of proportionate interest Rs.69,58,866 and on account of administrative and other charges Rs.9,37,500). As discussed above, I have already given by finding above the availability of sufficient own funds to make investments and also in view of the facts that loan raised by IFCI are utilized in acquiring fixed assets and working capital/Packing credit/bill discounting facilities raised by the appellant from other banking institutions are being utilized towards working capital requirements (as evident from the monthly stock statements filed with the banking authorities) therefore keepi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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