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2016 (6) TMI 420 - ITAT PUNE

2016 (6) TMI 420 - ITAT PUNE - TMI - Disallowance of interest - AO disallowed the claim on the ground that the assessee had more than enough interest free funds, i.e. to the tune of ₹ 128.84 crores at its disposal whereas the ICD given to M/s. Kinetic Engineering was amounting to ₹ 30 crores only - Held that:- The assessee has not used the ICD from M/s. Jaya Hind Sciaky Ltd. for the purpose of its own business and the assessee could not establish the nexus of interest income with tha .....

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ng before CIT(A) he has not admitted the same on the ground that there was no prayer for admission of the additional evidence and there is no justifiable reason as to why the same was not filed during the assessment proceedings. Although the assessee has explained that there is direct nexus between the ICD taken from M/s. Jaya Hind Sciaky and given to M/s. Kinetic Engineering Ltd., however, it is a fact that such nexus was not explained properly before the AO and the CIT(A) has not accepted the .....

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, JM For the Assessee : Shri C.H. Naniwadekar For the Revenue : Shri Vipul Waghmare ORDER Per R. K. Panda, AM This appeal filed by the assessee is directed against the order dated 14-03-2014 of the CIT(A)-V, Pune relating to Assessment Year 2008-09. 2. Disallowance of interest of ₹ 70,19,178/- by the AO and upheld by the CIT(A) is the only issue raised by the assessee in the grounds of appeal. 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of man .....

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AO on perusal of the details of unsecured loans accepted by the company during the year noticed that the assessee company has received unsecured loan from its Directors and their relatives and has not paid any interest on these unsecured loan of ₹ 128,81,01,051/-. Thus, according to the AO the assessee company had at its disposal interest free funds of ₹ 128,84,01,051/- and therefore, there was absolutely no reason to borrow funds whatsoever for the purpose of business or for any ot .....

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0 crores was given during the year. It was accordingly argued that the interest expenses of ₹ 70,19,178/- should be allowed. 5. However, the AO did not accept the above contention of the assessee on account of the following : 1. Assessee had more than enough interest free funds, i.e. ₹ 1,28,84,01,051/- crores at it disposal whereas the I.C.D. given to M/s. Kinetic Engineering Ltd. was amounting to about ₹ 30 crores only. 2. The nexus of interest income with interest expense cou .....

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es was received on, 23.03.2007 which was paid to Kinetic Engineering Ltd. on 26.03.2007. the appellant submitted that this should be admitted as additional evidence. The additional evidence filed by the appellant was forwarded to the Assessing Officer vide this office letter 12.04.2012. Subsequently, reminder in this regard was issued on 28.09.2013. However, no reply has been received from the office of the Assessing Officer in this regard. In view of the above position, it is held that the Asse .....

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f Sagar Sarhadi Vs. ITO, Hon'ble Mumbai Tribunal reported in 148 TTJ page 86 has held that assessee, though in possession of the documents having not produced the same before the Assessing Officer while replying to the relevant query made by the Assessing Officer is not entitled to produce the same in appeal before the CIT(A)". In this case, it is seen that the appellant was having the details regarding the current A/c and even though in possession of the same, it could not be produce b .....

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hat the same was used for the purpose of business. As far as the admissibility of the interest amounting to ₹ 70,19,178/- paid on account inter-corporate deposit of M/s. Jaya Hind Sciaky Ltd is concerned, it is seen that the same has been paid to Kinetic Engineering Ltd. not for the purpose of investment, as the total investment has actually declined. It is seen from the Balance Sheet that as on 31.03.2007 inter-corporate deposit to Kinetic Engineering Ltd., was ₹ 16,19,18,434/- whic .....

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the ground is dismissed. 7. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 8. The Ld. Counsel for the assessee at the outset referred to the bank account of the assessee company, copy of which is placed at pages 1 and 2 of the paper book. Referring to page 2 of the paper book he submitted that the assessee has obtained a loan of ₹ 5 crores on 23-03-2007 which was advanced to M/s. Kinetic Engineering Ltd. on 26-03-2007. He submitted that although the nexus of .....

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loan obtained. Therefore, the nexus was proved. He accordingly submitted that the disallowance is uncalled for. 9. In his alternate contention he submitted that the matter may be set aside to the file of the AO with a direction to give another opportunity to the assessee to explain the nexus of interest income with the interest expenditure. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that despite opportunities given during the .....

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erest free funds, i.e. to the tune of ₹ 128.84 crores at its disposal whereas the ICD given to M/s. Kinetic Engineering was amounting to ₹ 30 crores only. The assessee has not used the ICD from M/s. Jaya Hind Sciaky Ltd. for the purpose of its own business and the assessee could not establish the nexus of interest income with that of the interest expenditure. We find the CIT(A) rejecting the additional evidence filed before him upheld the action of the AO. The reasons given by CIT(A) .....

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