TMI Blog2016 (5) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... s - CIT(A) deleted the addition - Held that:- So far as the amounts appearing in the name of Advance Metal Corporation Pvt. Ltd. amounting to ₹ 69,89,667/- is concerned we find the Ld.CIT(A)deleted this amount on the ground that the assessee has already offered the above amount in his application before the Settlement Commission and has paid due taxes on the same. Since the Ld.CIT(A) on the basis of perusal of the order of the Settlement Commission on this issue has given a finding that assessee has already declared this amount before the Settlement Commission and paid the taxes and interest thereon, therefore, in absence of any contrary material brought to our notice by the Ld. Departmental Representative the order of the CIT(A) on this issue is upheld So far as the balance amount of ₹ 41,90,433/- is concerned we find the Ld.CIT(A) deleted an amount of ₹ 40,65,107/- and sustained an amount of ₹ 1,25,326/-. The amount ₹ 40,65,107/-consists of 4 items as per the Table given at para 25 of this order. From the details furnished before the Ld.CIT(A) we find the assessee has given the difference on account of opening balance at ₹ 6,49,223 + ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the preceding year. However, there is substantial increase in the sundry debtors as on 31-03-2009 as compared to the immediately preceding year. The sundry debtors have increased from ₹ 6.15 crores as on 31-03- 2008 to ₹ 9.51 crores as on 31-03-2009. From the details of sundry debtors furnished by the assessee the AO noted that assessee has advanced huge amount to associate concerns without charging interest, the details of which are as under : Name of the debtor Balance as on 31-03-2008 (in Rs.) Balance as on 31-03-2009 (in Rs.) Amit Garment 3,45,29,367/- 5,28,41,575/- Amit Apparel 80,35,328/- 1,08,12,872/- Sparkon Textile 1,52,20,499/- 1,37,84,936/- Total 5,77,85,194/- 7,74,39,383/- 4. From the ledger account of these parties he noted that none of the transactions of receipts and payments related to sale of goods or services by the assessee or the concerned parties and the transactions are pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of ₹ 1,96,54,189/- only to the sister concerns. Apart from the above, the assessee firm has also capital of partners of ₹ 3.35 crores as on 3103-2008 which has gone up to ₹ 6.56 crores as on 31-03-2009. It was argued that the method adopted by the AO is also erroneous because he has calculated the disallowance of interest on the opening balance of advances given/taken. However, since the interest is only an expense of current year, it is logical only to consider changes of receipt and payment of advances during the year. The fund flow statement was filed before the CIT(A) to substantiate that the interest free advances given to sister concerns are from interest free surplus funds available with the assessee and not from interest bearing loan funds. It was also submitted that the entities from whom advances have been taken and to whom advances have been given are all tax payer entities at the maximum marginal rate of income tax and they have filed their income tax returns. Therefore, the notional disallowance in one entity would result in corresponding reduction of income in another entity and thus tax impact as a whole will be NIL. Relying on various decisions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and that of the AO be restored. 11. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A). He submitted that when it was clearly established that the own funds as well as interest free funds available with the assessee are more than the interest free funds advanced during the year to sister concerns, no disallowance of interest/finance charge is permissible in view of the decision of Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (Supra). He submitted that the Coordinate Benches of the Tribunal are consistently taking the view that when sufficient interest free funds are available with the assessee which far exceeds the interest free advances given to sister concerns no disallowance of proportionate interest is called for. For the above proposition he relied on the following decisions : 1. DCIT Vs. A2Z Online services Pvt. Ltd. ITA No.1566/PN/2013 (Pune Tribunal) 2. M/s. Mihir Bakre Projects Vs. ACIT- ITA No.1710/PN/2012 (Pune Tribunal) 12. We have considered the rival arguments made by both the sides, perused the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were sufficient to meet the investments. Since in the instant case it is very clear from the details furnished that the interest free advances received from sister concerns during the year at ₹ 2.78 crores far exceeds the interest free amounts advanced to sister concerns at ₹ 1.97 crores, therefore, in view of the decision of Hon ble Bombay High Court cited (Supra) and in view of various other decisions relied on by the Ld. Counsel for the assessee no disallowance of proportionate interest is called for. In this view of the matter we uphold the order of the CIT(A) and the grounds raised by the revenue are dismissed. 15. The second issue in the grounds raised by the revenue relates to the order of the CIT(A) in deleting an amount of ₹ 1,11,80,098/- on account of difference in balance of creditors. 16. Facts of the case, in brief, are that the AO during the course of assessment proceedings issued notice u/s.136 of the Act to certain creditors of the assessee. Some of the creditors have replied directly to the office and in certain cases the assessee filed confirmations from some creditors. On verification of the confirmations raised from the creditors, vis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the assessee being the difference in balance of creditors. 18. Before CIT(A) the assessee made elaborate submissions. It was submitted that addition of ₹ 69,89,667/- has been made on account of difference in balances on account of Advance Metal Corporation. It was submitted that a search was conducted on the assessee after the completion of the above assessment on 31-01-2012. The assessee had filed an application before the Settlement Commission on 21-02-2013 for A.Y. 2006-07 to 2012-13 declaring the above amount and paid taxes and interest due on account of the above amount. The Hon ble Settlement Commission has accepted the settlement petition filed before them where the assessee after adding all the non genuine income had paid full taxes with interest which includes declaration of ₹ 69.89 lakhs. It was accordingly submitted that the amount of ₹ 69.89 lakhs should be excluded from the amounts since the decision of the same has already been passed by the Settlement Commission and taxes and interest on the same has been paid. 18.1 So far as the other parties are concerned the assessee filed the following summary of difference in the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,22,614 5 Domet Trading Pvt. Ltd. 2,05,872 6 Philolek Steel and Eng. Co. 51,408 7 Prathamesh Enterprises 21,133 8 Shree Sai Industries 26,439 Total 11,40,331 21. For the purpose of difference on account of opening balances the assessee filed the following chart : Sr.No. Name of the Party Amount (Rs.) 1 United Metal Industries 1,78,558 2 Shri Mahaveer Steel 4,51,846 3 Jindal Stainless Steel 18,819 Total 6,49,223 22. In the following cases, it was argued that the creditors have booked amounts paid by us at higher values due to clerical error. However, there is no discrepancy in our books: Sr.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee and tax with interest on the same has been paid. I have perused the order of the Hon. Settlement Commission in this matter and hence I conclude that addition of this amount is not necessary. ii. Other disallowances Sr. No. Particulars Amt (Rs.) Observations Conclusions 1 Opening balance difference 19,15,371 Difference due to earlier years transactions. No transactions during the year, amounts not credited to P L by the assessee Allowed (direct case law cited) 2 Bills passed and accepted for lesser amounts due to rate difference, difference in qty, P.O. terms etc. 9,28,855 Liability already reduced and profit increased in assessee s books Allowed (Section 41(1) not applicable) 3 Confirmation of different party considered by A.O. 7,99,925 Proper confirmation of correct party Jindal Steelway (similar name), purchase bill and payment proof produced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and heavily relied on the order of the CIT(A). He submitted that an amount of ₹ 69,89,667/- on account of Advance Metal Corporation has already been accepted before the Hon ble Settlement Commission. Therefore, the CIT(A) was justified in deleting this amount. 30. So far as the balance amount of ₹ 41,90,433/- is concerned he submitted that the CIT(A) has sustained an amount of ₹ 1,25,326/- and deleted an amount of ₹ 40,65,107/- by giving justifiable reasons. He accordingly submitted that the grounds raised by the revenue should be dismissed. 31. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the AO in the instant case has made addition of ₹ 1,11,80,098/- on account of difference in the balance of creditors in case of 10 parties. So far as the amounts appearing in the name of Advance Metal Corporation Pvt. Ltd. amounting to ₹ 69,89,667/- is concerned we find the Ld.CIT(A)deleted this amount on the ground that the assessee has already offered the above amount in his application before the Settlement Commission and has paid due t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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