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2015 (10) TMI 2240 - ITAT PUNE

2015 (10) TMI 2240 - ITAT PUNE - TMI - Disallowance of interest on borrowed funds u/s 36(1)(iii) - CIT(A) restricted the addition - Held that:- Admittedly, the investments were made by the assessee in the shares of its sister concerns in the earlier years, in which years no disallowance of interest was made. Further, the claim of the assessee before us is that the said investment was made with its sister concerns because it has business dealings with sister concerns and hence, the advances were .....

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TMI 4 - HIGH COURT BOMBAY). Accordingly, we set-aside the order of CIT(A) in restricting the disallowance to ₹ 5,89,573/- and direct the Assessing Officer to delete the same - Decided in favour of assessee.

Additional depreciation on expenditure on moulds disallowed - Held that:- The additional depreciation on assets is allowable under section 32(1)(iia) of the Act. However, no additional depreciation is allowable as per the proviso to section 32(1)(iia) of the Act, where plant .....

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nditure of ₹ 68,035/- incurred on account of labour charges in respect of conversion of old mould into new mould - Decided against assessee.

Disallowance of sales promotion expenses - Held that:- The claim of the assessee was that the payments were made through ICICI bank credit card. Except filing the statement of payments at pages 72 and 73 of the Paper Book, the assessee has failed to furnish any bills or any details or break-up of the expenditure incurred by the assessee und .....

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ess expenditure. - Decided against assessee. - ITA No. 884/PN/2011 - Dated:- 23-9-2015 - Ms. Sushma Chowla, JM And Shri Pradip Kumar Kedia, AM For the Appellant : Shri V. L. Jain For the Respondent : Shri Rajesh Damor ORDER Per Sushma Chowla, JM: This appeal filed by the assessee is against the order of CIT(A), Aurangabad, dated 07.04.2011 relating to assessment year 2008-09 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the .....

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tion expenses. 4. The appellant craves leave to alter, amend or delete any of the grounds of appeal or to add to the same, if deemed necessary. 3. The issue in ground of appeal No.1 raised by the assessee is against the disallowance under section 36(1)(iii) of the Act at ₹ 5,89,573/-. 4. Briefly, in the facts of the case, the assessee was a private limited company engaged in the business of manufacture of P.S.C. Poles. The assessee was a member of Yog Group of Aurangabad. Search action und .....

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- and had also given interest free loans & advances to sister concerns of ₹ 3,00,350/-. The Assessing Officer further noted that the Reserves & Surplus funds available with the assessee was ₹ 36,83,453/-. The Assessing Officer in view of the interest free advances made by the assessee by way of investment in shares of the sister concerns and after adjusting the Reserves & Surplus funds available with the assessee, was of the view that notional disallowance of interest @ 1 .....

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in its hands and the same could not be considered for disallowance under section 36(1)(iii) of the Act. It was further pointed out by the assessee that it had total of ₹ 1.26 crores as interest free funds available with it, on account of Share Capital, Profit and Loss Account, Security Premium Account and State Capital Incentive. The assessee further contended that in view of sufficient non-interest bearing funds being available, no disallowance was warranted under section 36(1)(iii) of t .....

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n respect of such loans obtained in the earlier years is to be disallowed in the hands of the assessee. The various reliances placed upon by the assessee were held to be mis-placed by the CIT(A). It was noted by the CIT(A) that similar disallowance of interest under section 36(1)(iii) was made in the hands of assessee in all seven years under appeal. However, the CIT(A) considered the plea of the assessee that it had interest free funds available at ₹ 1.26 crores against investment in loan .....

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new investment was made during the year and all the investments were made in earlier years and no disallowance of interest was made in the earlier years. It was specifically pointed out by the learned Authorized Representative for the assessee that the findings of CIT(A) that similar disallowance was made in all seven scrutiny assessment years was incorrect. It was further pointed out by him that the said investments and advances were made because of commercial exigency as the assessee had busin .....

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sessment was made in the earlier years and the issue has not been considered by the Assessing Officer, disallowance under section 36(1)(iii) of the Act could be made in the hands of the assessee in the instant assessment year, in view of the facts of the case. 9. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against the disallowance made under section 36(1)(iii) of the Act. The assessee was a company and had in the preceding year made adva .....

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Year 1996-97 ₹ 7,80,000/- Rs.4,83,845/- Fin. Year 1998-99 Rs.20,00,000/- Rs.1,95,004/- Fin. Year 2005-06 Rs.44,26,000/- Rs.15,99,780/- Fin. Year 2006-07 Rs.98,02,000/- Rs.61,27,092/- Fin. Year 2007-08 Rs. NIL Rs.09,47,473/- TOTAL Rs.1,73,58,000/- 10. The year under appeal before us is assessment year 2008-09 i.e. financial year 2007-08, in which no fresh investment was made. The assessee in addition to the investment in shares of the sister concerns had also advanced sum of ₹ 3,00,35 .....

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on 36(1)(iii) of the Act on net interest free loans and advances / investments of ₹ 1,38,67,538/-. The notional disallowance of interest worked out at ₹ 16,64,104/-, which was restricted to ₹ 10,16,378/- i.e. interest expenditure debited to the Profit & Loss Account. The CIT(A) on the other hand, upholding the disallowance of interest noted the plea of the assessee that the total of interest free funds available as on 31.03.2008 was ₹ 1,26,37,878/-, against which the .....

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inding that the Assessing Officer had disallowed interest under section 36(1)(iii) of the Act in all seven years under appeal, for which the scrutiny assessments were made. The assessee on the other hand, has pointed out that no scrutiny assessments were made in the earlier years. The Revenue is not in appeal against the order of CIT(A) in allowing the benefit of interest free funds available with the assessee at ₹ 1.26 crores as against investment of ₹ 1.75 crores. The only issue ra .....

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nd hence, the advances were for commercial exigency. In the totality of the above said facts and circumstances and in the absence of any finding by the Assessing Officer that the interest bearing funds available with the assessee have been utilized for making the aforesaid interest free investments, we find no merit in the disallowance made under section 36(1)(iii) of the Act. In this regard, we place reliance on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Reliance Utilities .....

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e assessee had claimed additional depreciation of ₹ 1,08,728/- on addition to plant & machinery. The assessee had made claim of additional depreciation @ 20% at ₹ 62,053/- in respect of additions to plant & machinery totaling ₹ 3,10,625/-. The said additions to plant & machinery are tabulated at page 4 of the assessment order. The Assessing Officer was of the view that where the assessee had paid labour charges for conversion of 9 mtr. Mould into 8 mtr. Mould and wh .....

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ing expenditure. It was further contended by the assessee that the installation expenses of capital assets were to be regarded as capital assets. Another plea raised by the assessee was that the Assessing Officer had incorrectly disallowed expenditure in respect of assets for which, the assessee had not claimed additional depreciation. The submissions of the assessee were forwarded to the Assessing Officer, who in the remand report dated 24.02.2011 has accepted that the additional depreciation w .....

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dition. In respect of expenditure relating to installation of new generator set at factory premises amounting to ₹ 25,660/-, the plea of the assessee that the said expenditure was capitalized with the cost of asset for calculating the depreciation, was accepted. The Assessing Officer was thus, directed to restrict the disallowance of additional depreciation to the extent of ₹ 13,607/-. 15. The assessee is in appeal against the aforesaid order of CIT(A). 16. The learned Authorized Rep .....

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; machinery installed after 31.03.2005, was earlier used either within India or outside India by any other person. Further, additional depreciation is not allowable on any office appliances. The assessee had paid labour charges for the conversion of its old mould into new mould and there was no purchase of new plant & machinery. In the above said facts and circumstances, we find no merit in the claim of the assessee and upholding the order of CIT(A) in disallowing additional depreciation on .....

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he documentary evidence in respect thereof. In response, the assessee stated that the sales promotion expenses were incurred through ICICI bank credit card and were sales promotion expenses. However, no bills were available with the assessee against the said expenditure. The Assessing Officer noted that the main customers of the assessee company were Executive Engineer, MSEB, Mula Pravara Electricity Co-op. Society and the others were sister concerns. The orders from the main customers were thro .....

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