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TMI Blog2019 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... f Accounts of the Appellants and as per Books of Accounts of M/s Piramal Retail & Merchandising P. Ltd. and Zivon Marketing P. Ltd., by treating such difference as interest income of the Appellant and thereby taxing the Appellant at notional profit. 2. He further erred in not admitting the evidence produced in support of the contention during the course of appeal proceedings by treating it as additional evidence and applying Rule 46A of the Income tax Rules, 1962. 3. He failed to appreciate and ought to have held that : i. the Appellant has only earned Rs. 41,72,766/- and Rs. 19,837/- as interest income, which has been offered for tax and has not received any amount over and above that, hence the question of taxing any excess amount doesn't arise; ii. the account with PRMPL has been settled during the current Assessment Year; iii. the accounts of the Appellant have been prepared on accrual basis which have been duly audited by the Statutory Auditors and Tax Auditors and hence the entire interest which has accrued during the year has been duly accounted; iv. an affidavit produced in support of the contention is not additional evidence." 3. Briefly put, the relevant fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal return of income filed by the assessee, it claimed credit for the entire TDS of Rs. 5,38,178/- deducted on the gross interest income of Rs. 2,57,37,730/-. Subsequently, in the course of assessment proceeding, vide letter dated 04.07.2007 assessee claimed that the TDS certificate issued by the PRMPL is factually incorrect and due to the same, inadvertently assessee claimed higher TDS amount to the extent of Rs. 4,51,154/- and withdrew the higher claim. Further, in the second revised return filed by the assessee, assessee disallowed the proportionate interest expenditure claimed by it pertaining to these loans. However, the Assessing Officer rejecting all the arguments of the assessee made an addition of Rs. 2,15,64,964/-, being difference in interest income reported by the assessee and interest income reflected in the books of PRMPL as paid to the assessee and Rs. 47,365/- as interest income from ZMPL. 4. Before CIT(A), assessee reiterated the submissions made before Assessing Officer and further submitted the affidavits of its CA and Vice-President to contend that the assessee has not received any amount over and above Rs. 41,72,766/- from PRMPL towards interest and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is discrepancy in the ledger of PRMPL and TDS certificate issued by them. Our attention was also drawn to the calculation of the interest earned by the assessee from PRMPL, which is placed at Page 12 of the Paper Book according to which interest works out to Rs. 41,72,766/-. It was also argued that the assessee had used borrowed funds to advance loan to PRMPL and has thus claimed finance cost in its return of income. Since assessee had not charged interest on the funds advanced to PRMPL for part of the period, assessee had also suo-moto disallowed the corresponding interest expenditure of Rs. 1,89,48,000/- u/s 36(1)(iii) of the Act. In view of the above, it was submitted that no addition can be made in respect of the difference in the amount reflected in the AIR and in the ledger of PRMPL, when no such amount was actually received by the assessee. 6. On the other hand, the ld. DR has reiterated the stand of the Assessing Officer on the basis of the reasoning contained in the assessment order, which has already been noted by us in the earlier part of this order, and is not being repeated for the sake of brevity. 7. We have carefully considered the rival submissions and peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f balance interest to the assessee when the assessee objected to the amount reported by them. He instead chose to restrict himself to the documents in his possession to make the addition. The Assessing Officer was very well empowered to summon the party, call for additional details from the parties to establish how that income pertained to the assessee and when the same was paid to the assessee. The Assessing Officer has not carried out any such exercise to rebut the contention of the assessee that they have not received any higher sum than what has been reported in its books of account. Further, the Assessing Officer has the power to pass on the information to the Assessing Officer having jurisdiction over PRMPL to find out the correctness of claim of interest expenditure of the PRMPL and if not found to be correct, the same could be added to the income of the PRMPL. The mere fact that TDS has been deducted on a particular amount cannot ipso facto lead to an inference that assessee has a right to receive and has in fact, received the corresponding amount when the assessee disputes the correctness of the said figure. The presumption is applicable when the deduction of TDS is follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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