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D.C.I.T. (LTU) , New Delhi Versus M/s. Hindustan Insecticides Ltd

2016 (1) TMI 713 - ITAT DELHI

Disallowance of interest - CIT(A) deleted the addition - Held that:- There is no finding in the assessment order also to suggest that the assessee did not use the borrowed funds for the purpose of business. In the event that the assessee maintains mercantile system of accounting, has provided interest on the loans from the Ministry in its accounts, and since, there is no evidence to suggest that interest on the loans have been waived by the Ministry, the disallowance of interest invoking the pro .....

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ortunity to the Assessing Officer to examine the sale invoices placed before him for the first time, which has been made the sole basis for deletion of addition. There is also no finding in the impugned order whether the production alleged to have been made before 01.10.2003 was a regular production or on trial basis. In view of these facts, we think it appropriate to restore the issue to the file of Assessing Officer for deciding the issue de novo after examining the evidences laid before the l .....

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A No. 3362, 3363/Del./2013 - Dated:- 30-10-2015 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Shri S.K. Saroha, CIT/DR For The Respondent : Shri Rajesh Arora, C.A. ORDER Per L.P. Sahu, Accountant Member: These two appeals by the Revenue are directed against the orders dated 28.03.2013 passed by the learned CIT(A) LTU, New Delhi for the assessment years 2004-05 & 2005-06 on the following grounds : 2004-05: On the facts and circumstances of the c .....

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in respect of which opportunity was not granted to the assessing officer under rule 46A of the Income-tax Rules. 2005-06: 1. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) has erred in deleting disallowance of interest expenses of ₹ 13,39,84,000/- on loans from Ministry of Chemical and Fertilizer ignoring the fact that the said disallowance was made by the assessing officer holding that the amount of interest was not deductible u/s. 36(1)(iii) of the I.T. Act. .....

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ugh Govt. of India. The assessee company is engaged in the business of manufacturing of various types of pesticides for curing various diseases and pollution in the country. Main supplies are made through Govt. of India and on the rates fixed by Govt. of India. Sometimes, these rates are even below the cost price of the product and accordingly, the assessee company is incurring loss regularly year after year. During the year under consideration, the assessee company filed its return of income de .....

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amount of ₹ 12,91,84,505/- towards payment of interest to the Govt. of India in respect of working capital loan sanctioned to it by that department of which the assessee is a public sector Undertaking. The Assessing Officer disallowed the claim of assessee observing that the assessee has not actually paid interest to the Govt. of India and therefore, applying the provisions of section 43B added back the same to the total income of the assessee. The Assessing Officer also disallowed 50% of .....

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the impugned order, the Revenue is in appeal before us. 3. The ld. DR relied on the order of the Assessing Officer whereas the ld. AR of the assessee supported the findings reached by the ld. CIT(A) in the impugned order. 4. We have considered the rival submissions and have perused the materials available on record. As far as the first issue regarding disallowance of interest, a perusal of relevant provisions of law suggests that the principle of allowing any amount of interest in respect of loa .....

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loans to the assessee by the Ministry. There is no finding in the assessment order also to suggest that the assessee did not use the borrowed funds for the purpose of business. In the event that the assessee maintains mercantile system of accounting, has provided interest on the loans from the Ministry in its accounts, and since, there is no evidence to suggest that interest on the loans have been waived by the Ministry, the disallowance of interest of ₹ 12,91,84,505/- invoking the provis .....

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before 01.10.2003 and same came into operation w.e.f. 01.10.2003. Therefore, the Assessing Officer rightly disallowed 50% of the depreciation claimed. It was submitted that the ld. CIT(A) wrongly deleted this disallowance on the basis of three sale invoices said to have been issued in the month of September, 2003 without giving any opportunity to to the AO to examine the same as contemplated under Rule 46A of the I.T. Rules. The ld. AR, on the other hand, relied on the findings recorded by the l .....

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