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M/s Adloc Pharmaceuticals Versus Addl. Commissioner of Income Tax, Range-2, Kota.

2015 (9) TMI 1341 - ITAT JAIPUR

Disallowance of interest payment - AO making a reverse working @ 12% interest with reference to the total amount of interest - Held that:- As far as the relations of M/s Chirag International Jaipur and Dr. Neelu Vashishta are concerned, the assessee’s explanation is not convincing, therefore, the same cannot be considered. However, there is some force in the argument of the ld counsel that the assessee company had sufficient interest free funds available to its own. We find merit in the argument .....

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- ITA No. 100/JP/2013 - Dated:- 24-7-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Assessee : Shri Mahendra Gargieya (Adv) For The Revenue : Shri Rajesh Ojha (JCIT) ORDER PER: R.P. TOLANI, J.M. These are cross appeals, one by the assessee and another by the revenue against the order dated 29/11/2012 by the learned CIT(A), Kota for A.Y. 2007-08. Respective grounds of appeal are as under: Grounds of assessee s appeal:- i) The impugned additions and disallowances made in the order U/s 14 .....

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nd facts of the case. Hence, the same kindly be deleted in full. (iii) The ld A.O. further erred in law as well as on the facts of the case in charging interest U/s 234A and 234B of the Act. The appellant totally denies its liability of charging any such interest. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full. Grounds of revenue s appeal On the facts and in the circumstances of the case, the ld CIT(A), Kota has erred in:- i) deleting tradin .....

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details for ascertainment of its income consequently, they were rejected U/s 145(3). Consequently the assessment was framed U/s 144 of the Income Tax Act, 1961 (in short the Act) by making trading addition of ₹ 12,77,322/-, and disallowing ₹ 8,23,987/- being corresponding interest on free loan and advances given by assessee. 4. In first appeal, the ld CIT(A) deleted the trading addition, on which the revenue is in appeal and upheld the disallowance of interest qua the assessee is in .....

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rious questions about details of expired and obsolete drugs/medicines and other details, which the assessee deliberately did not produce. The assessee s trading results are as under:- A.Y. - Sale - G.P. - %age N.P. 2006-07 6,12,57,852/- 2,14,66,690/- 35.04% 4.30% 2007-08 7,00,71,729/- 2,32,47,783/- 33.18% 3.81% While explaining the lower G.P., the assessee did not give proper reasons for reduction in trading margins and accepted that it was not possible for him to give further details, which is .....

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the assessee has deliberately scuttled the verification by the Assessing Officer and gave the explanation first time before the ld CIT(A), which does not justify such relief. The order of the ld CIT(A) should be reversed. 8. Ld counsel for the assessee on the other hand contends that the increase in excise duty is a matter of statutory record and merely because the assessee could not take a plea before the Assessing Officer does not disentitle him to take a legal plea before the ld CIT(A). 9. W .....

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icer noted that the assessee paid interest to bank on the bank overdraft and also paid interest to family members whereas on the other hand, he also made interest free advances totaling to ₹ 9,41,558/-. The figure of such subjected interest free advances as alleged by the A.O. has not been mentioned in the assessment order however, by making a reverse working @ 12% interest with reference to the total amount of interest of ₹ 8,32,987/-, the total amount of such advances appears to be .....

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ied upon certain case laws mentioned at Page 5 and 6 of the assessment order and particular CIT Vs. Abhishek Industries Ltd. (2006) 286 ITR 1 (P&H). Thus, finally, ld. AO disallowed interest to the extent of ₹ 8,32,987/-. 11. Aggrieved, the assessee preferred first appeal where the party wise justification for interest free advance was given as under:- 1. M/s Chirag International Jaipur. The firm is looking after liasioning work of the appellant and for the said work, advance on accoun .....

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ed funds for her personal work and looking to the future prospectus, assessee gave the loan to her and interest is not paid/charged by her. It is also submitted that Dr. Neelu Vashistha is not related with the appellant firm. Interest disallowed ₹ 52000/-. It was further contended that the ld Assessing Officer did not establish any nexus between diversion of interest bearing funds to interest free advances which have been objected on. There can be no tax on notional income. Reliance is pla .....

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