TMI Blog2015 (5) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that the amount which has been lent to M/s. Swati Autolink Pvt Ltd is at a higher rate than the weighted average cost of funds. Before us, it is also the assessee’s submission that the amounts were advanced in earlier years also and no disallowance was made in the earlier years, for which reliance was placed on judgment of Sridev Enterprises (1991 (1) TMI 52 - KARNATAKA High Court). Before us, the Revenue has not brought any material on record to controvert the above submissions made by the assessee nor has brought any contrary binding decisions in its support nor could point out any distinguishable features of the decisions cited by ld. AR. In view of the above facts, we are of the view that no disallowance on account of interest could be made in the present case. - Decided in favour of assesse. - ITA No. 2936/Ahd/2011, CO No. 05/Ahd/2012 - - - Dated:- 24-4-2015 - Shri Rajpal Yadav And Shri Anil Chaturvedi JJ. For the Appellant : Shri Dinesh Singh, Sr. DR. For the Respondent : Shri S. N. Soparkar, AR ORDER Per Shri Anil Chaturvedi, ACCOUNTANT MEMBER : This is an appeal filed by the Revenue and the Cross-Objection filed by the assessee, both ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of business of the appellant. 6. First we take-up the Revenue s appeal. 7. The ground No.1 of the Revenue s appeal is with respect to the rejection of assessee s books result u/s 145(3) of the Income-tax Act. 8. During the course of assessment proceedings, on perusing the details of inwards and outwards of Ispaghula Seeds, the Assessing Officer noticed that the quantitative information with respect to inward and outward of Ispaghula shown by the assessee was not reconciled. He also noticed that the assessee s submission of loss due to infestation was not debited in the Profit and Loss account. He was, therefore, of the view that the assessee was not showing the true facts in the books of accounts. Further, the Assessing Officer noted that the assessee had not produced any evidence of infestation/loss or shortage. He accordingly considered the books of accounts of the assessee to be defective and rejected the book result of the assessee u/s 145(3) of the Income-tax Act. He was further of the view that the submission of the assessee of incurring of loss of ₹ 14 lacs on account of infestation and which has resulted into fall in GP was not acceptable as accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for in the audited accounts of the assessee and the assessee had also submitted the proper reconciliation and reasons for the fall in Gross Profit. Before us, the Revenue has not brought any material on record to controvert the findings of the ld. CIT(A). We, therefore, find no reason to interfere with the order of the CIT(A). Hence, this ground of appeal of the Revenue is dismissed. 11. Ground No.2 of the Revenue s appeal is with respect to the deletion of disallowance of ₹ 13,93,195/- made by the Assessing Officer on account of interest expenses. 12. On perusing the Profit and Loss account of the assessee, the Assessing Officer noticed that the assessee had shown net interest income of ₹ 11,81,410/-, after the set off interest expenses of ₹ 24,88,291/-. He also noticed that the assessee has given ₹ 4,35,50,183/- to Swati Autolink Pvt Ltd on which it had charged interest at the rate of 6.75%; but on the other hand the assessee was paying interest at 9%. The submission of the assessee that its weighted average interest cost was 4.91% as against which it had charged at 6.75% interest on M/s. Swati Autolink Pvt Ltd was not found acceptable to the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces totaling to ₹ 1,00,99,6257-to the 5 concerns mentioned by the A.O. at para 4.1 of the assessment order, appellant was left with ₹ 2,15,21,244/- of non-interest bearing funds. Thus out of advance given to Swati Autolink of ₹ 4,35,50,183/- was out of interest-free funds, the sum of ₹ 2,15,21,244/, leaving the balance of ₹ 2,20,28,939/- advanced out of funds borrowed on interest @ 9%. The advance was given on interest @ 6.75%. Therefore, I consider it reasonable to work out the disallowance of interest @ 2.25% (9% minus 6.75%) on ₹ 2,20,28,939/- which works out to ₹ 4,95,651/-. Thus disallowance of interest of ₹ 4,95,651/- is upheld. Balance disallowance of interest of ₹ 13,93,195/- is deleted. Thus ground of appeal is partly allowed. 13. Aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us and the assessee has also filed Cross-objections for the partial disallowance. Before us, ld. Departmental Representative submitted that in the absence of cash flow statement, the Assessing Officer was justified in making the addition. He thus supported the order of the Assessing Officer. 14. The ld. Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on the last day of the previous accounting year and, therefore, its nature and status could not be different from its nature and status as on the last day of the previous year. Regarding past years, the assessee s claim for deduction were allowed in respect of the sums advanced during those years. This could be only on the assumption that those advances were not out of borrowed funds of the assessee. This finding during the previous years was the very basis of the deductions permitted during the past years. It would not be equitable to permit the Revenue to take a different stand now in respect of the amounts which were the subject-matter of previous years assessments. Before us, the Revenue has not brought any material on record to controvert the above submissions made by the assessee nor has brought any contrary binding decisions in its support nor could point out any distinguishable features of the decisions cited by ld. AR. In view of the above facts, we are of the view that no disallowance on account of interest could be made in the present case. We, therefore, direct the Assessing Officer to delete the disallowance made on account of interest expenses. Thus, this g ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
