TMI Blog2018 (8) TMI 2085X X X X Extracts X X X X X X X X Extracts X X X X ..... of the recoveries made by the assessee from its business and, therefore, the borrowed funds were not used - main contention of the assessee is that assessee has accruals before investment made in the land - HELD THAT:- The argument of the assessee is not accepted, because the profit accrues to the assessee at the end of the accounting year when the final accounts are made. It does not accrue on day-to-day basis. Further the assessee could not show the interest free funds available with him at the time of purchase of land and, therefore, we do not find any infirmity in the order of the learned CIT (Appeals) in confirming the addition of Rs.1,94,888/- on account of interest expenditure. Accordingly, ground No. 2 of the appeal of assessee is dismissed. Disallowance u/s14A read with Rule 8D(2)(3) - HELD THAT:- As for assessment year 2008-09 the Co-ordinate Bench has deleted the disallowance on account of interest, but there is no reference of the disallowance with respect to the expenditure. As there is no claim by the assessee that no such expenditure has been incurred by the assessee, we do not find any merit in the appeal of the assessee with respect to the disallowance confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the parties are in appeal before us. 3. Now we first take up the appeal of the assessee. The first ground of appeal is against the sustaining addition of Rs.9,82,800/- being 30% of purchases and allowing 70% of the purchase cost. On the addition deleted the Revenue is in appeal vide ground No. 2. 4. The brief facts of the issue is that for assessment year 2008-09 the Assessing Officer made detailed enquiry and held that certain purchases made from certain parties are bogus. Consequently the additions were made. The learned Assessing Officer noted that assessee has purchases of Rs.32.76 lakhs from M/s. Om Trading Company. The assessee submitted copy of the account of the above party and the details of payment made to that party. The learned Assessing Officer vide para No. 5.2 noted the enquiries made by the Assessing Officer in case of this party in earlier year. Therefore, the assessee was asked to prove the genuineness of the purchases from this party. Assessee submitted that the purchases were made from this party based on the estimate cost sheet and also substantiated with the stock register to show that the material has been received from this party. The learned Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and, therefore, the order of the learned CIT (Appeals) is not proper. 7. We have carefully considered the rival contentions and find that the issue is squarely covered by the decision of the Co-ordinate Bench in assessee s own case for assessment year 2008-09 dated 18.04.2017 wherein on the identical facts and circumstances the order passed by the learned CIT (Appeals) was upheld wherein the deletion of the disallowance to the extent of 70% and confirmation of the disallowance to the extent of 30% was upheld. The Co-ordinate Bench has considered the decision of the Hon ble Bombay High Court also as pressed before us by the learned Departmental Representative and the decision of the Hon ble Delhi High Court as pressed by the learned DR. In that year the purchases from this party was also involved. In view of this, we do not find any reason to interfere with the order of the learned CIT (Appeals). Accordingly ground No. 1 of the appeal of the assessee and ground No. 2 of the appeal of the Revenue are dismissed. 8. Now we come to ground No. 2 of the appeal of the assessee wherein the disallowance of Rs.1,94,888/- confirmed by the learned CIT (Appeals) on account of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of interest expenditure. Accordingly, ground No. 2 of the appeal of assessee is dismissed. 10. Ground No. 3 is with respect to the disallowance of Rs.7,500/- under section 14A read with Rule 8D(2)(3) of the Act. The learned Assessing Officer noted that assessee has made an investment of Rs.15 lakhs in the mutual fund and, therefore, assessee was asked to explain the disallowance under section 14A of the Act. The assessee submitted that the investments are out of interest-free funds and no interest is disallowable. However, the assessee did not made any reference of the other expenditure and, therefore, he applied 0.5% of expenditure amounting to Rs.7,500/- and further also allowed interest component of Rs.1,50,000/-. Consolidated disallowance under section 14A of Rs.1,57,500/- was made. 10.1 On appeal before the learned CIT (Appeals) he deleted the disallowance on account of interest following the decision of the Co-ordinate Bench in assessee s own case for assessment year 2008-09, but confirmed the disallowance of Rs.7,500/- on account of expenses. Therefore, the assessee is in appeal before us. 11. The learned authorized representative relied upon the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on mercantile basis. As on the last day of the account, such advances are required to be restated in terms of the accounting standard 11 issued by the ICAI and further compulsorily to be followed by the company, the assessee recorded the foreign exchange fluctuation, which resulted into loss. The loss was debited to the profit and loss account and claimed as deduction. The foreign exchange fluctuation is on account of advance received for supply of goods, which is revenue in nature and as it is a trade advance, therefore, according to us, no error can be found in the order of the learned CIT (Appeals) in allowing the claim of the assessee based on the decision of the Hon ble Supreme Court. 17. In the result, ground No. 1 of the appeal of the Revenue is dismissed. 18. Ground No. 3 of the appeal of the Revenue is with respect to the disallowance of Rs.23,01,048/- deleted by the learned CIT (Appeals). 18.1 The brief facts of the case shows that assessee has purchased land of Rs.3.83 crores in the earlier years and interest was determined on the said land, which was not put to use during the year of Rs.36,76,668/-. During the year such land was put to use on 1.10.2008 and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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