TMI Blog2017 (12) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest from which tax is deducted for taxation. Hon'ble Delhi High Court in CIT Vs. Jai Parabolic Springs Ltd [2008 (4) TMI 3 - DELHI HIGH COURT] has held that there is no prohibition on the powers of the appellate authorities to entertain the additional claim for the just decision of the case. Therefore, accordingly, we reverse the finding of the lower authorities and direct the ld AO to verify the claim of the assessee of TDS of credit and if found in accordance with the law same may be granted. In the result appeal of the assessee is allowed with above direction. Addition on account of closing stock - Held that:- In the present case the difference is of 8346 bags. On principle we agree with the findings of the lower authorities, that if a different stock in quantity is shown to the banker then in the books before the revenue authorities the balance difference is required to be added in the hands of the assessee as income. However, as the lower authorities has not given proper opportunity of reconciliation of the stock to the assessee the issue is set aside to the file of the ld Assessing Officer with a direction to the assessee to produce the quantitative register main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m loans and cash credit limits . Therefore, having noted this finding by the A.O. the interest expenditure should have been allowed by the CIT(A) as normal business expenditure and the ground of the assessee should have been allowed. 3. The CIT(A) has erred in not following the precedent in favour of the assessee in the earlier years. Therefore, also the disallowance of interest should be deleted. 4. The Id. CIT(A) has erred in treating the ground relating to treatment of interest earned ₹ 1,01,13,216/- as alleged income from other sources instead of business income as not pressed. The assessee has pressed the ground which should have been accepted and adjudicated by the CIT(A). 5. Without prejudice to Ground No.4, the assessee submits that details were provided to the A.O. who has reproduced in his order that the interest was on deposits which were pledged for securing bank guarantee for excess sugar realization and molasses storage fund and interest earned from Govind Nagar Sugar Factory Ltd. on running account in their regular dealings. Therefore, the interest income is extricably linked with the business activities of the assessee and should be allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench in its own case for AY 1999-2000. 6. The ld DR also fairly conceded the same. 7. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The assessee has submitted a copy of balance sheet of the company wherein the own fund shown by the assessee are far in excess of non-interest bearing advances given. The coordinate bench has considered this issue in assessee s own case in ITA No. 1033/Del/2014 for the Assessment Year 1999-2000, in detail and deleted the interest disallowance vide para No. 6 as under:- 6. We have carefully considered the rival contentions and also considered the orders of the lower authorities. The Ld. CIT A has deleted the addition holding that no interest-bearing funds have been directed towards interest free advances to the sister concerns. It was further found that loans were obtained by assessee for specific purposes and which duly represented in the value of the stock. The Ld. CIT further relying on the decision of the Hon‟ble Bombay High Court in case of CIT versus Reliance utilities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even otherwise the issue needs to be decided on the merits of the case. Therefore, we set aside ground No. 4, 5,7 and 8 back to the file of the ld CIT(A) with a direction to decide the issue on merits. 13. Ground No. 6 is not pressed before us therefore, same is dismissed. 14. Ground No. 9 of the appeal is with respect to disallowance of interest of ₹ 237600/- on advance given to M/s. SK Engineering. As we have already decided ground No. 1 to 3 of the appeal wherein in the advance of ₹ 98.85 lacs this party was covered. Therefore, for the same reason we direct the ld Assessing Officer to delete the disallowance of ₹ 237600/- on advance to this party. Ground No. 9 of the appeal of the assessee is allowed. 15. In result ITA No. 224/Del/2009 is partly allowed. 16. In ITA No. 3969/Del/2009 for AY 2004-05 is against the order of the ld CIT(A)-XIX, New Delhi dated 14.06.2010 wherein, the claim of the assessee with respect to non granting of TDS credit of ₹ 1840862/- was not accepted. 17. The brief facts are that the assessee has received interest of ₹ 9623833/- which was offered for taxation but the ld Assessing Officer did not grant credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the order of the AO in respect of the following:- a) Telephone Expenses (Adhoc Disallowed) 52000 b) Estimated addition of Interest on NSC (estimated Adhoc amount) 300000 The telephone expenses are to be allowed as they re incurred for the purpose of business. The estimated addition to income should be deleted. 4 Without prejudice to ground no 3, if the investment in NSC s being ₹ 283105, the maximum interest that is available for the last year is ₹ 63416. Therefore the addition of ₹ 300000/- is excessive. 5. The above grounds are independent and without prejudice to one and another. 20. The first ground of appeal is not pressed and therefore, same is dismissed. 21. Ground No. 2 of the appeal is against the addition confirmed by the ld CIT(A) on account of closing stock of ₹ 12769380/-. 22. The brief facts are narrated in para No. 6 of the order of the ld Assessing Officer. The ld Assessing Officer received an information that assessee is showing undervalued stock of sugar in its books of account as compared to stock balance declared before its bankers. It was found that assessee has pledged as at 31.03.2005, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is allowed with above direction. 26. Ground No. 3 is with respect to ad hoc disallowance of ₹ 52000/- made by the ld Assessing Officer pertaining to Mr. Narang and his family out of miscellaneous expenses. The ld Assessing Officer noted that the assessee did not show that how the same have been incurred for the purpose of the business. The ld CIT(A) also upheld the disallowance. The assessee submitted that this is the telephone expense of the director for official use which was reimbursed to him. The ld DR relied on the orders of the lower authorities. 27. We have carefully considered the rival contentions and we direct the ld Assessing Officer to delete the disallowance of ₹ 52000/- out of telephone expenditure as the above expenditure was incurred by the company for the director for official use. 28. The next addition of ₹ 3 lac was made by the ld Assessing Officer on account of accrued interest on post office saving certificate and national savings certificate. The assessee has not shown any interest income during the year on this investments. It was claimed by the assessee that it would be shown when it is received as it is following mercantile s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her contends that the earlier management might have provided the information to the bank of higher stock position for obtaining higher CC limits which is a plausible explanation. However, as no fault has been found in the books of accounts or stocks declared by the assessee, the particulars provided are correct and no penalty u/s 271(1)(c) can be levied. 6. The above grounds are independent and without prejudice to one another. 34. The issue on which penalty has been levied is on addition of ₹ 12769380/- which has already been set aside by us back to the file of the ld Assessing Officer in ITA No. 4871/Del/2009 with a direction to the assessee to submit the reconciled working of the quantitative details. As the quantum proceedings are set aside the penalty orders cannot be decided first. Therefore, we set aside the penalty orders passed by the lower authority also back to the file of the ld Assessing Officer with a direction to re-compute and levy the penalty after first deciding the issue on quantum addition. Needless to say that the assessee may be given a proper opportunity of hearing before levy of the penalty u/s 271(1)(c) of the Act. Accordingly appeal No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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