TMI Blog2010 (1) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Standard Steel and Sales. The assessee declared the gross profit of 3.68 per cent. on total sales of ₹ 6,28,85,200 as against the gross profit at 3.69 per cent. on sales of ₹ 4,41,12,995 in the immediately preceding year. 3. The noted that the assessee shown outstanding liability in the name of M/s. Gayatri Enterprises and M/s. Om Steel Traders amounting to ₹ 12,93,013 and ₹ 8,47,930. The purchases from M/s. Gayatri Enterprises were made during the financial year 1999-2000. The Assessing Officer conducted inquiry at the address mentioned in the bill. M/s. Gayatri Enterprises was not found at the stated premises. The Assessing Officer also noted that the bill number is different than that mentioned in the octro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this year conducted much prior is of little consequence. As regards M/s. Om Steel Traders, the learned authorised representative submitted that the account was settled in subsequent years and the payment was made by account payee cheque. At all points of time the assessee has acknowledged the liability and hence the provisions of section 41(1) cannot be invoked. In support of his submissions, the learned authorised representative relied on the decision of Ahmedabad Tribunal in the case of New Commercial Mills Co. Ltd. v. Deputy CIT reported in [2001] 73 TTJ (Ahd) 893 and the decision of the Mumbai Tribunal in the case of DSA Engineers (Bombay) v. ITO reported in [2009] 30 SOT 31 (Mumbai). 5. The learned Departmental representative, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied, it is for the Assessing Officer to prove that the allowance or deduction has been made in the assessment for any year in effect of loss or trading liability incurred by the assessee and such liability has ceased or the assessee has obtained whether in cash or in any other manner some benefit in respect of such liability. Explanation 1 inserted to section 41(1) by the Finance (No. 2) Act, 1996 with effect from April 1, 1997 will also not apply. For such Explanation to apply, there should be at least unilateral act on the part of the assessee to write off such liability in its account. Since the assessee has acknowledged the liability throughout and such liability in subsequent years was either settled by returning the goods or by making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been paid. The assessee is also found to have given interest-free loans/advances to M/s. Mehta Steel Corporation and Shreeji Steels, associate concern of the assessee. The assessee failed to show that the amount advanced was out of interestfree funds. The assessee has not disputed the facts that the amount paid was out of borrowed funds. Accordingly, since facts remained that the interest-bearing funds have been diverted for giving advances without charging any interest and without demonstrating that the advances was in the course of business, the disallowance of interest is to be upheld. 11. Ground No. 6 relates to disallowance out of car and scooter expenses of ₹ 10,000 was not pressed at the time of hearing. This ground dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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