TMI Blog2013 (11) TMI 1792X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was not governed by AS-7 of the guidelines of institute of chartered Accountants of India, ignoring the underlying fact that the assessee had performed and undertaken all actions as a contactor and camouflaged the performance as developer . 2. The CIT(A) erred in law and on facts in deleting interest disallowance of ₹ 13,62,808/- overlooking the fact that the company had diverted the funds for the directors of the company, which caused delayed payment to and charging of interest by the Municipal Corporation. 3. The first ground relates to rejection of books of account and applying of rate of 8 % on the booking advances. 4. Brief facts of the case are that assessee is engaged in the business of sale/purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be made applicable. Accounting standard AS-9 which has been reproduced by the Ld. CIT(A) and has been discussed at pages 4-8 of his order is applicable in the present circumstances and facts of the case. Moreover, it has not been controverted by the Ld. DR appearing for the Revenue that the assessee had awarded the contractors to various other contractors. Also it has not been controverted that there is no construction activity carried out by the assessee during the year and there was a dispute of the parties who had filed civil suit in Mumbai civil court. The assessee had received the advances which are duly reflected in the balance-sheet of the assessee. There is no certainty of the Revenue recognition at this stage. Moreover, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt Purpose 1. Paresh Bhuta (HUF) 15,00,000 Deposit Guest House 2. Harsha Bhuta 25,00,000 Deposit Mumbai Office 3. Jayshreeben Bhuta 3,70,000 Mrs. J, P. Bhuta 4 Abhi Builders 5,00,000 For purchase of property 5 Dilip Pandit 1,65,000 Advance 6 Dwarksh Corporation 2,25,125 For purchase of property. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration. Moreover, no justification has been given for the huge interest free deposits given to Smt. Harsha Bhuta, Smt. Jayshree Bhuta and Paresh Bhuta (HUF), persons specified u/s.40A(2)(b) of the Act. Under the circumstances, the entire of ₹ 15.06,203/- cannot be allowed as a deduction, as claimed by the assessee. The assessee has paid interest @ 15% on the unpaid premium, but has not charged any interest on the sum of ₹ 90.95 lakhs advanced (as worked above). Adopting the rate of interest at 15% the amount of ₹ 13,62,808/- is disallowed out of the interest expenses as the advances could not be established to have been given for the purpose of business.. In this regard reliance is also placed on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, which may or may not be for business purpose. However, this issue becomes immaterial if no interest has been paid on any borrowed fund. Proportionate interest, if any can be disallowed depending on the fact of the case, but an assessee cannot be forced to earn income. Therefore on the facts of the case there is no justification for disallowance on this count. Accordingly, this ground is allowed. Since the order of Ld. CIT(A) during the assessment year 2005-06 in assessee s own case on similar facts was upheld by Tribunal vide its order dated 03-02-2012, by observing as under:- 7. We have heard the rival contentions and perused the facts of the case. There is no dispute to the fact that the assessee had made the payment of int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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