TMI Blog2016 (12) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... uced immediately. The Administrative expense are incurred based on the set up of the business and commercial expediency in the context of type of activity, business profile of the company and the volume of turnover / activity. We also found that during the year under consideration expenses have been reduced by 7% as compared to the expenditure of last year. Moreover, company’s total income for the AY 2009-10 was ₹ 2.89 crores as per Profit and Loss Account which is more or less same as per last year. Disallowance of interest - interest attributable to funds given free of interest or given on interest but no interest on such advances were accounted for in the books of accounts - Held that:- We have considered the rival contention and found that for not providing interest income on advances, no material was brought on record by assessee to substantiate that even principle amount is in doubt. In the interest of justice, we restore this issue back to the file of the AO to find interest free funds available with the assessee which has been used for giving interest free advances. Assessee is also directed to place on record the position of borrower so as to find out if the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also not identify the employees of different company. Accordingly, the AO has proportionately allowed only 1/8th of administrative expenses which resulted in disallowance of ₹ 4,19,60,112/- out of the administrative expenses claimed by the assessee. 6. By the impugned order of learned CIT(A), the learned CIT(A) partly allowed the assessee s claim after observing as under : After considering the rival submissions as well as the material fact of the case in entirety, it is noted that while disallowing the expenses the AO has overlooked few important aspects such as (i) it has ignored the fact that appellant has got reimbursed ₹ 45 lakhs from other companies (ii) the two group companies namely M/s. Rapid Supplier Pvt. Ltd. and M/s. Anreka (Trades Services Pvt. Ltd. are non functional during the year under consideration (iii) the other companies have also debited more than ₹ 13 crore administrative expenses in their P L account. After considering these material facts as well as the fact that there is no proper demarcation of area and emp1oyees of different companies of the group, as has been brought out in the report of the ITI, it appears that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed immediately. The Administrative expense are incurred based on the set up of the business and commercial expediency in the context of type of activity, business profile of the company and the volume of turnover / activity. We also found that during the year under consideration expenses have been reduced by 7% as compared to the expenditure of last year. Moreover, company s total income for the AY 2009-10 was ₹ 2.89 crores as per Profit and Loss Account which is more or less same as per last year. 9. In view of the above, we do not find any justification for the disallowance so made by the AO. 10. Assessee is also aggrieved for disallowance interest expenses of ₹ 1,64,86,521/-. Facts in brief are that the assessee is non-banking financial company and also engaged in trading in shares and securities. During the course of assessment order the Assessing Officer observed that assessee's total borrowed capital as on the Balance Sheet date is ₹ 4702.85 lakhs., on which total interest expenditure of ₹ 37981 170 has been claimed by the assessee. At the same time, it is also noted from the Balance Sheet that the outstanding balance in loans and advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it was not actually realized as the assessee was following mercantile system of accounting. The Commissioner(Appeals) affirmed the order of the Assessing Officer but the Tribunal deleted the interest. On further appeal: Held. dismissing the appeals, that the assessee-company being a non- banking financial company, was bound by the provisions of the Reserve Bank Ai India Act, 1934, and the 1998 Directions, under which it was mandatory the part of the assessee not to recognize the interest on the intercorporate deposit as income, having regard to recognized accounting principles. The amounting principles which the assessee was indubitably bound to follow are AS-9. The admitted position was that the assessee had not received any interest on the intercorporate deposit since the assessment year 1996-97 as it had become a non-performing asset in accordance with the Prudential Norms which was entered in the books of account as well. Even in the succeeding Assessment years, no interest was received and the position remained the same until the assessment year 2006-07. Winding up petitions were filed by many creditors against the debtor company. These circumstances led to an uncer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous years is the very basis of the deductions permitted during the past years, whether a specific finding was recorded or not. A departure from that finding in respect of the said amounts advanced during the previous year would result in a contradictory finding; it will not be equitable to permit the Revenue to take a different stand now in respect of the amounts which were the subject matter of previous years' assessments; consistency and definiteness of approach by the Revenue is necessary in the matter of recognising the nature of an account maintained by the assessee so that the basis of a concluded assessment would not be ignored without actually reopening the assessment. The principle is similar to the case where it has been held that a debt which had been treated by the Revenue as a good debt in a particular year cannot be subsequently be held by it to have become bad prior to that year. 17. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities and their respective orders as well as cited by learned AR and DR during course of hearing b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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