TMI Blog2014 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of fact that there is absence of direct nexus between the interest free advance given and the loan raised and that the major part of advances was for trading security and the balance advances were covered by the availability of interest free funds – revenue has not brought any material on record to controvert the findings of CIT(A) – thus, there is no reason to interfere with the order of CIT(A) – Decided against Revenue. Deletion of unutilized MODVAT credit as income – Held that:- CIT(A) while deleting the addition made by the A.O. has noted that in assessment year 02-03 similar addition was made by A.O. and the same was deleted by CIT(A) - CIT(A) has further noted that since the facts of the year under consideration were similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 on 30.10.2005 showing total loss of Rs. 1,55,20,120/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 31.12.2007 and the total loss was assessed at Rs. 1,37,79,570/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) vide order dated 07.09.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal before us and has raised the following grounds:- 1.1 The Learned CIT(A) - VIII, Ahmedabad has erred in law and on facts in deleting the disallowance of interest expenses of Rs.10,14,420/- without properly appreciating the facts of the case and the materials brought on record. 1.2 In d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee was not found acceptable to A.O. A.O. noted that Assessee had not brought on record any evidence in support of its contention of having advanced money for purchase of material or business purposes. He was of the view that when Assessee has incurred substantial interest expenses it cannot allow others to use money interest free. He therefore concluded that Assessee has diverted interest bearing funds for advancing interest free advances and therefore the interest chargeable on such advances is to be disallowed out of the interest expenses. He placing reliance on the decision in the case of Abhishek Corporation 286 ITR 1 (P H) worked out the interest chargeable on advance of Rs. 67,62,799 @ 15% and disallowed Rs. 10,14,420/-. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is not a good law after the decision of the Hon'ble Supreme Court in the aforesaid case. Even otherwise also, the appellant was having sufficient non-interest-bearing funds of Rs. 6,01,61,255/- as per details given by the Ld. Counsel in his submission and on account of it, there was no ground for disallowance of interest as the interest free funds are sufficient enough to give interest free advances. Reliance is placed on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities Power Ltd. 313 ITR 340 (Bom.) wherein it was held that if there are funds available, both, interest-free and overdraft and/or loans taken, then a presumption would arise that investment would be out of the interest-free f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jor part of advances was for trading security and the balance advances were covered by the availability of interest free fundes. . He further relying on the decision of predecessor in the assessee's own case for A.Y. 03-04 deleted the disallowance made by A.O. Before us, the ld. D.R. has not brought any material on record to controvert the findings of CIT(A), we therefore find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. Ground no. 2.1 and 2.2 are interconnected and therefore considered together and are with respect to deletion of addition in respect of the unutilized MODVAT credit as income of the Assessee. 8. On verification of the audit report, A.O. noted that Assessee had shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition made by the A.O. has noted that in assessment year 02-03 similar addition was made by A.O. and the same was deleted by CIT(A). Against the order of CIT(A) Revenue had preferred appeal before Tribunal and the same was dismissed by Tribunal by order dated 03.04.2007 in ITA No. 264/AHD/2007 for A.Y. 02-03. CIT(A) has further noted that since the facts of the year under consideration were similar to that of A.Y. 02-03 03-04, following the decision of Tribunal, the addition made by the A.O. was deleted. Before us, the ld. D.R. could not controvert the findings of CIT(A) nor has brought any material in its support. We therefore find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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