TMI Blog2019 (5) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... as no impact on financial position of the assessee, as the same is revenue neutral. The ld.CIT(A) has accepted the method adopted by the assessee in the light of various judgments. - ground of Revenue is dismissed. Addition on account of interest paid on capital work-in-progress - no interest bearing funds were utilized in connection with the capital WIP - HELD THAT:- We are of the view that the ld.CIT(A) has rightly set aside the issue to the file of the AO for verification of this claim, with direction to allow the same if he finds the same to be correct. This direction of the ld.CIT(A) cannot said to be incorrect or unjust. - ground in both the appeal of the Revenue and the CO of the assessee is rejected. Addition u/s 2(22)(e) - deemed dividend - HELD THAT:- We find that the CIT(A) has recorded a finding that the assessee is not a shareholder of the lender company within the meaning of section 2(22)(e) and therefore, there is no question of treating the loan to be deemed dividend in this case. The CIT(A) has based his finding on the ground that similar addition was deleted in the assessee s own case for the assessment year 2009-10, which was upheld by the Tribunal also [ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on facts in deleting the addition made u/s 2(22)(e) of ₹ 6,46,30,742/- without appreciating the fact that in the case of Corrtech International Pvt. Ltd., the fact of the case differs from earlier year and in the case of Control Plus Oil Gas Solutions, the company is a subsidiary company of the holding company. 4. Brief facts of the case are that the assessee is engaged in the business of manufacturing gas turbine blades, engineering services, contract of gas turbine and trading of spare parts. It has filed its return of income on 30.9.2011 declaring income at ₹ 8,05,20,440/-. The assessee has shown total turnover of ₹ 47,02,24,803/- on which net profit of ₹ 7,82,70,094/- has been declared. After processing the return under section 143(1), the case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The assessee filed details called for by the AO in the assessment proceedings. 5. During the assessment proceedings, the AO noticed that assessee has debited a sum of ₹ 37,27,034/- as bad debts and other balances as written off in the profit loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other words, it was not part of the assessee s income. The ld.CIT(A) remitted this issued to the file of the AO for verification and observation that if it was found to be part of assessee s income of earlier years, then it be allowed as deduction. On the other hand, alternative contention of the assessee is that, if it is not allowed as bad debts, then it be allowed as business loss. This pleading has been taken in the CO. After taking into consideration both the submissions of the assessee, we deem it appropriate to modify the direction of the ld.CIT(A). We uphold the remittance of the issue of bad debts to the file of the ld.CIT(A). The ld.AO shall decide the issue in both angles. He first decide whether sum of ₹ 10,14,810/- has suffered tax in earlier years, and can be allowed as bad debts as claimed by the assessee. If not, he shall verify whether it can be allowed as business loss under section 37 of the Income Tax Act. With the above observations, both the issues be treated as allowed for statistical purpose. 8. Second ground of appeal of the Revenue relates to deletion of addition of ₹ 13,61,057/- made under section 145A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. CENVAT will form part of closing stock only when the same is debited to the profit and loss account i.e. at the time of actual payment. Addition and/or deduction of CENVAT to the value of closing stock has no impact on financial position of the assessee, as the same is revenue neutral. The ld.CIT(A) has accepted the method adopted by the assessee in the light of various judgments. Therefore, we do not find any merit in this ground of appeal of the Revenue. It is dismissed. 12. In ground No.3 of the Revenue s appeal and ground no.4 of CO of the assessee, common issue is raised, which relate to addition of ₹ 14,56,331/- on account of interest paid on capital work-in-progress. 13. In the assessment proceedings, the AO noticed that the assessee has shown capital work-in-progress at ₹ 765,48,558/- after debiting interest of ₹ 87,40,956/- paid against purchase of capital goods. The ld.AO sought details of interest expenses from the assessee. Assessee furnished a detailed break-up of interest paid to various banks. The ld.AO disallowed proportionate interest expenses of ₹ 14,56,331/- considering the same as relatable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the appeal of the Revenue and the CO of the assessee is rejected. 16. In ground no.4, Revenue is aggrieved by the action of the ld.CIT(A) in deleting addition made by the AO under section 2(22)(3) of ₹ 6,46,30,742/-. 17. Brief fact of the matter is that during the assessment proceedings, the ld.AO noticed that the assessee has received an amount of ₹ 6,09,98,428/- from Control Plus Oil Gas Solutions P.Ltd., and also received an amount of ₹ 36,32,314/- from Correct International Pvt.Ltd. during the year. Assessee was show caused as to why advance received from two companies should not be considered as a deemed dividend. Assessee submitted that these advances were temporary business loan which were paid by them in the year under consideration and there was no outstanding balance lying in its books. In support of this contention, assessee has filed ledger account of these two companies. It was further submitted that the assessee company was not shareholder of the lender companies, and therefore provisions of section 2(22)(e) would not be applicable. The ld.AO did not accept this explanation of the assessee, and held that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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