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Survottam Enterprises Ltd Versus Income Tax Officer, Ward 8 (4) , Kolkata

2015 (8) TMI 315 - ITAT KOLKATA

Addition on Interest income - accrual of interest on the money advanced - Held that:- This issue is squarely covered by the decision of State Bank of Travancore Vs. CIT [1986 (1) TMI 1 - SUPREME Court] wherein Hon’ble Court had accepted the preposition that if the financial condition of the debtor had deteriorated and from the history of its accounts, the recovery of the principal amount had become improbable and extremely doubtful rendering the “sticky” advances and as such interest thereon tho .....

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interest income from assessment year 1997-98, by that time more than three years have already been expired. Thus, alleged interest income cannot be assumed and deserves to be deleted

As far as loan given to M/s. Khaitan Hostombe Spinels Ltd is concern, this loan was given on 08-07-1996. It is also in the same assessment year. The evidence produced by the assessee relates to the AY 2003-04. In AY 1997-98, it cannot be assumed that recovery of the principal amount was doubtful. Therefo .....

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essee has closed down its business during the years under consideration. If there is temporary suspension in the manufacturing activity, then depreciation on the factory building cannot be denied. Therefore, we allow this ground of the appeal in both years and delete this addition of ₹ 20,321/- and ₹ 18,992 towards claim of depreciation - Decided in favour of assessee.

Disallowance of travelling & conveyance - Held that:- merit in this ground raised by the assessee because .....

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against the separate order of Ld. CIT(A) dated 14-09-2011 passed for assessment years 1997-98 and 1998-99. 2. The assessee has taken as many as five/six grounds of appeal in both the assessment years under consideration, but its substantial grievance revolves around the additions/disallowances on the following issues:- A.Y 1997-98 A.Y 1998-99 a) Interest income Rs.2,74,315 Interest income Rs.5,25,000 b) Interest income Rs.1,50,000 (Rs.3,75000+Rs.1,50,000) c) Depreciation ₹ 2,0321 Depreciat .....

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ers on 30-11-07/10-11-07 u/s. 254/143(3) of the I.T Act 1961 for the assessment years under consideration. 4. The AO observed that the assessee had advanced a sum of ₹ 15 lakhs to M/s. S.S Industries Ltd in two installments i.e ₹ 10 lakhs given on 27-10-1990 and ₹ 5 lakhs on 19-11-1990. The assessee has been following mercantile system of accounting. It had received interest income on these advances till accounting year ending on March 1992. The debtor thereafter stopped the pa .....

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is report dated 20-11-07 that M/s. S.S In Industries Ltd. was not in existence on the address provided by the assessee. He also reported that this company has filed I.T Return upto assessment year 2003-04. This company had declared itself as insolvent. Thus, the Hon ble High Court has appointed a special officer. The ld. AO on the basis of the Inspector s report arrived at a conclusion that the company was in existence upto assessment year 2003-04. The assessee has been recognizing the loans to .....

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d that this company has also stopped making the payment of interest. The probability to recover of the principal amount is in doubt. Therefore, the assessee did not recognize the interest income. It was also contended that the Dena Bank has filed a suit for recovery of the amount against this company before the Debts Recovery Tribunal. Its assets have been put up for auction. The advertisement to this effect was published on 26-06-2004. The assessee has also produced the copy of the advertisemen .....

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d in 158 page 102. The Hon ble Court had accepted the preposition that if the financial condition of the debtor had deteriorated and from the history of its accounts, the recovery of the principal amount had become improbable and extremely doubtful rendering the sticky advances and as such interest thereon though debited to them following accrual system of accountancy, the alleged interest income would not be taxable in the hands of the assessee because it is a hypothetical income and not a real .....

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ore than three years have already been expired. Thus, alleged interest income cannot be assumed and deserves to be deleted in view of the said decision of the Hon ble Supreme Court in the case of State Bank of Travancore (supra). 7. As far as loan given to M/s. Khaitan Hostombe Spinels Ltd is concern, this loan was given on 08-07-1996. It is also in the same assessment year. The evidence produced by the assessee relates to the AY 2003-04. In AY 1997-98, it cannot be assumed that recovery of the .....

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