TMI Blog2020 (2) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 38.40 per kg which resulted in under invoicing sale by ₹ 20,74,752/-. Even before me also, the assessee is unable to substantiate its claim with any evidence or valid explanation. Disallowance of interest of total bank interest - HELD THAT:- No infirmity in the orders of the Revenue authorities on this issue, because both have concurrently found that the assessee does not have sufficient interest free funds of his own to advance the sister concern at the lesser rate. The claim of the assessee was that loan was advanced to the party from surplus and/or accrual does not carry any force, because no documentary evidence or material was furnished by the assessee even before me. It is pertinent to note that on one hand the assessee is opting to suffer loss due to sales at much lesser rate and incurring heavy interest expenditure to the extent for loans taken from bank at the rate of 10.72%, on the other hand, the assessee is advancing loan to sister concern at the rate of 2%. Therefore the disallowance made by the Assessing Officer and sustained by the Ld. CIT(A) is justified. - ITA.No.2119/Ahd/2017 - - - Dated:- 12-2-2020 - Shri Rajpal Yadav, Vice-President ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er words, against purchase cost of ₹ 173.40/- per kg assessee has sold the same to the said Jai Durga Bhandar at ₹ 135/- by incurring a loss of ₹ 38.40/- per kg. To a show cause noticed issued by the AO, assessee explained that on account of anticipated fall in future in price of milk, the assessee has committed to sell the same at ₹ 135/- per kg. However, price did not fall, assessee had to sell milk powder at the committed price, though it has suffered loss, which was confirmed by the party. The ld.AO did not accept this explanation of the assessee as the explanation was not supported by any documentary evidence. He noted that assessee has sold milk powder much less than the cost price that too not in an isolation transaction but several transactions made during the year. Summary of loss made in respect of sales made to M/s.Jai Durga Bhandar was extracted by the AO in his impugned order. It reads as under: Sr. No. Date of purchase Purchase price per Kg. in Date of Sale Sale price per Kg. Quantity 'in Kg. Loss per Kg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts to the said M/s.Jay Durga Bhandar at lesser rate, when it anticipated price fluctuation. He submitted that Revenue should not interfere in the business decisions of the assessee, and it is for businessman to determine at which price it has to sell its products to its customers. The ld.counsel for the assessee relied upon various decisions of Hon ble High Courts, viz. CI T Vs. Keshavlal Chandulal, 59 ITR 120 (Guj), CIT Vs. Calcutta Discount Co. Ltd., 91 ITR 8 (SC), A. Khadar Basha Vs. ACIT, 58 taxmanncom 332 (Karn), Flipkart India P.Ltd. Vs. ACIT, 92txmann.com 387 (Bang-Trib) and Sir Ramalinga Chodambikai Mills Ltd. Vs. CIT, 28 ITR952 (Mad). The ld.DR on the other hand, supported the order of Revenue authorities. 7. I have considered submissions of both the parties and gone through the orders of Revenue authorities. I also perused decisions cited by the ld.counsel for the assessee at bar, but they are distinguishable on facts. It is pertinent to take note of the findings recorded by the ld.CIT(A) in his impugned order. It reads as under: 4.2 I have carefully considered rivalcontention and observations made by the A,O, in the assessment order. It is observed that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loss. The appellant has .relied upon the judgment of Bangalore Tribunal in the case of DCIT vs Sphoorti Machine Tools 30 Taxman.com 413 (Banglore Trib.). It is seen from the said case law that in that case the assessee was supplying the products to the sister concern at a price of lesser than the price at which the same product was sold to third parties. The Tribunal has held that sale of the assessee to its sister concern at a lesser price would not be the sufficient ground to reject the books of accounts. In the case under consideration, M/s. Jai Durga Bhandar is not a related party. There are no other transactions with Jai Durga Bhandar on paper to show its closeness with appellant. The A.O has also tried to collect information on business connection with appellant from other suppliers, however, has failed in getting the information from those suppliers. The argument of the appellant that it was committed to sale Jai Durga Bhandar at ₹ 135 has not been substantiated by the appellant. The appellant has not produced any written commitment or sale at loss.or has not produced any proof whereby the appellant has made a trade off for incurring losses in the supply of milk pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground no.4(i) to 4(iv) of the appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming disallowance of interest of ₹ 5,58,821/- out of total bank interest of ₹ 15,23,823/-. 10. With the assistance of the ld.representatives, we have gone through the record carefully. As it emerges out from the record, the ld.AO noticed that the assessee has paid bank interest of ₹ 15,23,823/- at the rate of 10.72% on an outstanding of ₹ 1,42,12,414/- taken from the bank. It was further noticed by the AO that the assessee has made loan advances of ₹ 5,39,59,000/- to M/s.Prakash Associates, a related party and charged interest ₹ 9,65,002/- at the rate of 2%. The ld.AO construed that the assessee has not utilized the borrowed funds for its business purpose, rather diverted to sister concern in the form of loan at lower rate of 2% per annum. To the show cause notice issued by the AO, explanation of the assessee found to be not satisfactory, hence the ld.AO worked out difference of interest charged and received at ₹ 5,58,821/- and added to the total income of the assessee. Not satisfied with order of the AO, the assessee went in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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