Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2016 (1) TMI 854

ree funds would been available with the assessee then the assessee would not applied for debt restricting with the financial institutions - Held that:- Assessee has huge interest free fund available with it and therefore the disallowance u/s 36(1) (iii) on account of advances given to other parties from of interest cannot be disallowed. Therefore we confirm the order of CIT (A) in deleting the disallowance on account of amounts advanced to sister concerns without charging interest. - Decided in favour of assessee.

Disallowance of club membership fees holding that these are of personal nature - Held that:- Club membership fees paid for employees is allowable u/s 37 of the Act. Before CIT (A) assessee has given detailed list of persons for whom the membership is taken. Therefore disallowance of club membership is deleted. Ground of the appeal is allowed.- Decided in favour of assessee. - ITA No. 1689/Del/2013, ITA No. 6260/Del/2013 - 6-11-2015 - SH. C.M.GARG, JM AND SH. PRASHANT MAHARISHI, AM For The Assessee : Rajeev Mango, C.A. For The Revenue : Sh. P. Dam Kanunjna, Sr. DR ORDER Per Prashant Maharishi, AM: 01. These are the two appeals relating to the assessee for asse .....

X X X X X X X

Full Text of the Document

X X X X X X X

nessman to divert the funds for non-interest bearing advances. Therefore he disallowed interest of ₹ 29,26,116/-. He further submitted that CIT (A) has erred in confirming the disallowance of ₹ 5,20,783/- only and deleting the disallowance of ₹ 24,05,333/-. He further submitted that the amount of advances given to Netcradel India Pvt. Ltd. and Saffron Range IT Solution Pvt. Ltd. were for non-business purposes and therefore interest @ 12.5% computed on this advances should be disallowance. 05. Ld. AR before us submitted that CIT(A) has rightly deleted in the interest disallowances for the following reasons : a) The advances the amount outstanding with respect to Netcradel India Pvt. Ltd. is for the purpose of the business and therefore no interest disallowance can be imputed for the same. b) Regarding the advance to Saffron Range IT Solution Pvt. Ltd. no advances authorities are not given during the year. c) Assessee has 52.64 crores of interest free funds available with the assessee d) The purpose of the borrower on which is interest of pay is for the construction of hotel and therefore full interest is allowable. 06. We have carefully considered the rival submiss .....

X X X X X X X

Full Text of the Document

X X X X X X X

decision of Honourable Punjab and Haryana high court in case of CIT V Abhishek Industries Limited 286 ITR 1 is misplaced. CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1/ 156 Taxman 257 (Punj. & Har.) [Para 2] impliedly overruled by the decision of honourable Supreme court in case of CIT v Munjal Sales Corporations 298 ITR 298. Further honourable Delhi High court in CIT V Tin Box Co in 260 ITR 637 has held that 9. While noticing that the Department had not been able to controvert or disprove the facts that the assessee had substantial capital and interest-free funds available with it, not only in the preceding years but also in the years under consideration, which far exceeded the interest-free advances to the sister concern, the Tribunal finally concluded as under : "We are in agreement with the submissions made by learned counsel for the appellant because the factual position as submitted before us by learned counsel for the appellant has not been controverted by the learned Departmental Representative. The admitted facts are that the appellant-firm has been enjoying overdraft facilities from the State Bank of India, Chandni Chowk, Delhi, since long time past against t .....

X X X X X X X

Full Text of the Document

X X X X X X X

taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd. s case (supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the overdraft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest- .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||