TMI Blog2019 (1) TMI 1852X X X X Extracts X X X X X X X X Extracts X X X X ..... ment - CIT(A) on the issue has observed that the commission was claimed by way of journal entry at the end of the year - HELD THAT:- We find, it is not disputed by the Revenue that broker or so called dalal, they have shown income in their return and that the assessee has also deducted TDS on such payments. Taking into consideration of entire facts and circumstances, the total disallowance is unjustified and therefore, we restrict the disallowance @20% of the total expenses. Hence, ground No.2 of the appeal is partly allowed. Addition of interest - interest was paid on the loans taken from the banks and on the other hand, no interest was charged on loans given to the sister concerns - HELD THAT:- We find that the CIT(Appeals) stated that nexus of interest free funds is not established and funds are inter mixed. The assessee stated in the written submission that working of interest on interest free funds received and interest on interest free funds advances have been submitted before the Ld.CIT(Appeals) - As per the contention of the assessee is that it has got more interest free funds which are more than the interest free advances made, to meet the ends of justice, we confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds as occasion may demand. 2. At the time of hearing, Ld. AR of the assessee filed written submissions before the Bench and prayed that the instant case may be decided on the basis of the written submissions. However, we asked the Ld. AR of the assessee to place argument which he refused to do so and insisted that the written submissions may kindly be considered while deciding the appeal of the assessee. Accordingly, we have taken written submissions on record while deciding the grounds of appeal. 3. With regard to the first ground of appeal, the facts are that the assessee is engaged in the business of extraction of oil from cotton seed and refining the wash oil. The assessee is running two proprietary concerns under the name and style as Shree Ganesh Refinery , Jalna and M/s. Balaji Oil Mills, Jalna which is mainly engaged in manufacturing of all types of oil and oil cakes. The total turnover of the assessee, during the year of account exceeds ₹ 60 Lakhs. Therefore, as per provisions of section 44AB of the Income Tax Act, 1961 (hereinafter referred to as the Act ), assessee has got audited his books of accounts and filed along with the return of income aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission has stated that the supplier is local supplier having registered under the MVAT. The assessee has produced before the Assessing Officer and CIT(A), purchase bills, Extract of account, quantity statement and nexus with sale bills etc. It is the contention of the assessee in the written submissions that the Assessing Officer disallowed for the reason that no delivery challan and transport receipt were given. The Assessing Officer doubted sales as if cash sales for less than purchase price for not producing the proof of payment to supplier. 7. We have perused the case record and written submissions filed by the assessee. Taking into consideration of entirety of facts and circumstances, we deem it fit and proper to uphold the disallowance @20% on the said purchases and Assessing Officer is directed to provide appeal effect accordingly. Hence, ground No.1 of the appeal is partly allowed. 8. With regard to the second ground, it is the disallowance of commission payment of ₹ 15,12,700/-. The facts with regard to the issue is that the assessee shown to have paid dalali to Shri Shyam Shingare and Shri Monohar Singare at ₹ 7,10,400/- and ₹ 8,02,300/- tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the loans taken from the banks and on the other hand, no interest was charged on loans given to the sister concerns namely, J.J. Oil Industries Pvt. Ltd. Mona Oil Mills, Nilesh Oils Industries Shree Balaji Udyog. On further verification of records, it was noticed that the assessee had taken petty amounts from the sister concerns occasionally but given substantial amounts to other sister concerns. Though they were categorized as sundry debtors but in fact they were not the trade debtors. Accordingly the AR of the assessee was confronted with these facts and requested to explain as to why interest should not be disallowed treating the advances for non-business purposes. Accordingly, the AR of the assessee had furnished these details by calculating the amount of interest on product basis which worked out to ₹ 13,98,527/- and also agreed for the said disallowance. However the aforesaid issue was contested in the appeal by the appellant. It was alleged that the AR of the appellant had not agreed for the addition. Accordingly the undersigned examined the assessment records and it came to light that the AR of the appellant had agreed for the alleged addition vide entry no.IV i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njay Cottonseed Industries for FY 2010-11. The counsel of the appellant has stated that this sister concern had given interest free funds of ₹ 81,92,469/-to the assessee. However if opening balance of ₹ 29,46,957/- and purchases of ₹ 43,71,690/- are excluded, then amount advanced by M/s Sanjay Cottonseed Industries to the appellant stood at ₹ 1,24,06,822/-. As against that, the appellant had returned amount of ₹ 1,15,33,000/- in the year itself. In such an eventuality, the stand of the appellant that interest bearing funds were available with him, does not appear to be correct acceptable. I have also examined the ledger extract of M/s Shanti Udyog for FY 2010-11. The counsel of the appellant has stated that this sister concern had given interest free funds of ₹ 18,88,234/-to the assessee. However if opening balance of ₹ 10,93,234/- and purchases of ₹ 7,95,000/- are excluded, then no amount was advanced by M/s Shanti Udyog to the appellant in the year under reference. The purchases were on credit and amount of ₹ 10,93,234/- was carried forward from earlier years. In such an eventuality, the stand of the appellant that intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered. But this was not accepted by the Assessing Officer. The assessee also contended that he has submitted working of interest on interest free Advances received and interest on interest free advances. The assessee further relied on the decision of Hon'ble Bombay High Court in the case of Reliance Utilities Power Pvt. Ltd , reported in 313 ITR 340 and in the case of HDFC Bank Ltd. reported in 383 ITR 529 wherein it has been held that if there is interest free funds are more than interest free advances, no addition can be made. 13. We have perused the case record and the written submission filed by the assessee. We find that the CIT(Appeals) stated that nexus of interest free funds is not established and funds are inter mixed. The assessee stated in the written submission that working of interest on interest free funds received and interest on interest free funds advances have been submitted before the Ld.CIT(Appeals). Placing reliance on the decisions of Hon'ble Jurisdictional High Court mentioned aforesaid, the contention of the assessee is that it has got more interest free funds which are more than the interest free advances made. Taking into consideration of e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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