TMI Blog2016 (5) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... st income accrued on time deposits - ITAT confirmed CIT(A) order deleting the addition - Held that:- Find merit in the submission of the learned counsel for the assessee that the credit journal entries made as accrual of interest were made for the purpose of closing of quarterly results. The entries have been reversed and the interest actually received has been offered to tax. It is not the case of the appellant that the actual interest income received has not been offered to tax. The AO has only taken into account the ‘Journal’ entries credited in the account. The AO has not taken into account the corresponding ‘Journal’ entries debited. The CIT(A) as well as the Tribunal on perusal of the account statement have returned findings of fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in dismissing the appeal of the Revenue and deleting the addition of ₹ 1,27,21,738/- made by the AO on account of disallowance of interest income accrued on time deposits? 4. With regard to question A i.e., disallowance of ₹ 1,30,01,214/- made by the AO, it may be noted that the AO had made the disallowance on the basis that the assessee was not doing any business activity but acting as a real estate developer. The expenses claimed debited to its profit and loss account were held to be not related to its day-to-day business activities. 5. The CIT(A) noted that the assessee was engaged in the business of providing and running of hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd depreciation of the assets related to business but had not held that the balance expenditure was not genuine. The CIT(A) held that the disallowance of 50% of the expenditure was not based on any scientific method or any specific defects were pointed out in the books of account. The disallowance of 50% of the expenditure and depreciation was held to be unjustified. The disallowance was accordingly deleted. The Tribunal has affirmed the finding of the CIT(A). 7. We find that the findings returned by the CIT(A) are purely factual in nature. The CIT(A) has examined the record and the accounts produced by the assessee and after scrutiny of the same returned findings of fact that the expenditure was justified. No rationale has been given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as filed before the Tax Authorities were also produced before us. Perusal of the same shows that the interest income of ₹ 1,27,21,738/- in issue relates to the FDs with Citi Bank Ltd. and not with ICICI Bank as recorded by the CIT(A) as well as the Tribunal. The statement of account shows that two types of credit entries have been made. One is with regard to the credit of the amount with the voucher type shown as bank receipts and the other is shown with voucher type as Journal . It is contended by the counsel for the respondent that the Journal entries were made in the account as a memorandum of the accrual of interest on quarterly basis for the purpose of closing of quarterly results and on receipt of the actual interest fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/20/2007 Interest accrued on Time Deposits Journal 1007 Rs. 21,13,817.00 Being interest accrued on time deposits upto 20.12.2007 as per the FD Details attached 12/28/2007 Interest accrued on Time Deposits Journal 1092 Rs. 29,11,075.00 Being interest accrued on time deposits upto 28.12.2007 as per the FD Details attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Journal 919 ₹ 24,62,284.00 Being interest accrued on time deposits upto 30.11.2007, now REVERSED Interest accrued on Time Deposits Journal 1029 ₹ 21,13,817.00 Being interest accrued on time deposits upto 20.12.2007, now REVERSED 12/31/2007 Interest accrued on Time Deposits Journal 1108 Rs. 29,11,075.00 Being interest accrued on time deposits upto 28.12.2007 as per the FD Details attached, now reversed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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