TMI Blog2013 (5) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... at the corresponding rate of interest paid by the assessee on his secured/unsecured loan, relying on the Hon ble Supreme Court s judgement in the case of M/s. S.A. Builders Ltd., Vs. CIT(2007) 288 ITR 1 (SC), where it is held that interest can be allowed as deduction if the payment is made on account of commercial expediency u/s 37 if the I.T. Act. Whereas as per material available on record and reply of the assessee during the assessment proceedings, no commercial expediency reflected in giving interest free advances. 3. Whether the action of Ld. CIT(A), Chandigarh, allowing the claim made by the assessee u/s 54 F of the I.T. Act, 1961 at ₹ 5,67,904/- relying upon the decision of Hon ble Madras High Court in 181 ITR 101 in the case of CIT Vs. P.V. Narasimhan, is correct. When the judgement relied upon is not of jurisdictional High Court. 4. Ground No.1: After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee has shown agriculture income of ₹ 4,75,827/-. The Assessing Officer informed the assessee that the gross receipts of agricultural produce could not be produced as agricultural income because fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as a case of shifting of stand. Accordingly, we find nothing wrong in the order of Ld. CIT(A) and confirm the same. 10. Ground No.2 : After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee has given some interest free advances to M/s Chandigarh Cable Pvt. Ltd. On enquiry, it was submitted that advance was given for purchase of land for business purposes as well as for purchase of some materials. Since the land was not registered in the name of assessee till 31.3.2006, the Assessing Officer was of the opinion that ratio of the decision of Hon'ble Punjab Haryana High Court in the case of Abhishek Industries Ltd 288 ITR 1(P H). would be applicable and accordingly, he disallowed interest @ 10.9% on the amount of advance and added a sum of ₹ 79,364/- as income of the assessee. 11. Before CIT(A), it was mainly submitted that Assessing Officer has not denied that advance was given for purchase of material as well as land. He has made the disallowance merely because land was not registered in the name of the assessee. Details of the advances were also filed before the CIT(A). The Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000.00 6,100,000.00 16-Apr-07 By Purchase of Electrical Cables 2,592,419.00 3,507,581.00 31-Jul-07 By Purchase of Electrical Cables 2,019,841.00 1,487,740.00 11-Jul-08 By Purchase of Industrial Plot C-69-70 61 62 1,094,400.00 393,340.00 (547200 x 2) at Chanolan, Distt. Kurali 393,340.00 11-Jul-08 By Purchase of Building at Plot No. c-69-70 393,340.00 Total 7,025,000.00 7,025,000.00 The above shows that a sum of ₹ 10,94,400/- has been adjusted against purchase of the land and about ₹ 50 lakhs towards purchase of material. As far as advances against material are concerned, the same is for business purposes and, therefore, no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court agreed with the Tribunal by observing that construction on first floor would definitely amount of construction of new house. Later on, in the case of CIT Vs V. Pradeep Kumar (supra), the decision in the case of P.V. Narasimhan (supra) came in for consideration. However, this decision was distinguished not on principle because in that case it was found that no new construction had been made and only some renovation work has been done, therefore, in our opinion, the issue has been correctly decided by Ld. CIT(A) and we confirm her order. 19. In the result, Revenue s appeal is partly allowed. ITA No. 1005/Chd/2012 Assessee s appeal. 20. In the appeal following effective grounds have been raised by the Revenue :- 1. That the Ld. CIT(A) is not justified in upholding the disallowance of ₹ 32,930/- made by the Assessing Authority u/s. 14-A of the I.T. Act read with rule 8-D under the facts circumstances of the case. 2. a) That the Ld. CIT(A) is not justified in upholding the disallowance of ₹ 73,79,647/- u/s. 40 (a) (ia) under the facts circumstances of the case. b) That the appellant disputes the quantum of addition made. 3. That th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that these payment are in the nature of hire and purchase, therefore, no TDS was deductible and in this regard Instruction No. 1425 in F. No. 275/90/80/IT(B) dated 18.11.1981 was relied on where the Board has directed that no TDS is required to be deducted on hire charges. The Assessing Officer after examining the issue found that in most of the cases, the amount has been mentioned as loan amount and some documents were not available, therefore, he disallowed a sum of ₹ 73,79,647/- in view of section 40(a)(ia) of the Act 28. Before the Ld. CIT(A), detailed submissions were made but Ld. CIT(A) confirmed the addition. 29. Before us, Ld. Counsel for the assessee relied upon the decision of Special Bench in the case of Merilyn Shipping Transports v ACIT in I.T. Appeal No. 477 (Viz) of 2008 dated 29.3.2012 and submitted that since amount had already been paid therefore, no TDS was deductible on amount already paid. He further filed a computation sheet of hire charges. DETAIL OF HIRE CHARGES/INTEREST PAID DURING A.Y. 2006-07 Hire Charges a) L T Finance Ltd., 2,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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