9911796707
TMI Blog2022 (7) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... assed u/s.250 on 02-07-2014 for A.Y.2010-11 by CIT(A)-XX, Abad upholding partly the disallowance interest exp. made by AO in appeal effect order u/s. 250 r.w.s 143(3) dated 24.02.2014 is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned disallowance. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the disallowance of interest expenses on financial transactions carried out with M/s. Om Kailash Cotton during the year as well as its entire opening balance. 2.2 That in the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Advances" should appear as opening balance for financial year 2009-10 under the head "Loans and Advances" and not "Sundry Debtors". By transferring funds from the head "Loans and Advances" to "Sundry Debtors", the assessee has changed the type of fund which in fact was not in financial year 2008-09 as such the transfer of funds is a clear motive and an afterthought attempt to evade tax. The AO further noticed that the assessee had taken interest-bearing loans on which interest to the tune of Rs. 1,55,11,995/-was paid during the impugned assessment year 2010-11 . Against this, assessee had given loans and advances to M/s Om Kailash Cotton of Rs. 5,84,19,065/- on which no interest was charged. In view of the above facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and worked out the interest disallowance @ 12% amounting to Rs. 19,13,491/-. Accordingly, Ld. CIT(Appeals) held that no disallowance of interest on trading activities are called for and accordingly directed the AO to rework the interest disallowance after excluding therefrom the trading activities, after carrying out due verification. In the appeal effect order, the AO again reconfirmed the earlier disallowance of Rs. 36,84,544/- by holding that the appeal effect proceedings before him, the assessee has changed and reduced the amount of opening balance receivable on the account of M/s Om Kailash Cotton as on 01.04.2009 from Rs. 3,07,88,727/- to Rs. 5,24,388/- for no justifiable reason, for the purpose of computing the interest disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give any further bifurcations of the opening balance of Rs. 3,07,80,727/-then the entire opening balance may be presumed to be relating to financial transactions only. 6. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) in the second round of appellate proceedings. We note that the ITAT in ITA No.266/Ahd/2013 in the assessee's own case for the immediately preceding assessment year 2009-10, has dismissed the assessee's appeal with the following observations (though the assessee has informed us that the miscellaneous application has been filed and case has been recalled, and therefore the same are being reproduced only for reference purposes for better understanding of history of on-going litigation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts of the case. The assessee also has not established any business relevancy or business expediency that interest free loan advances purposes. Thus, we upheld the order of the CIT(A). 7. Before us, the counsel for the assessee has reiterated the arguments taken in appellate proceedings before Ld. CIT(Appeals). He has submitted that it is a composite account consisting of both financial and trading transactions with M/s Om Kailash Cotton. He further reiterated that since the assessee was having sufficient interest-free funds, it cannot be presumed that interest-bearing funds for use for purpose of granting interest free advances to M/s Om Kailash Cotton. He further drew attention to pages 11 to 16 of the paper book and contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of financial transactions with M/s Om Kailash Cotton offered for taxation by the assessee (at pages 11 to 16 of the paper book) is also not reliable for the reason that it has taken the opening balance of Rs. 5,24,388/- instead of Rs. 3,07,80,727/- for which no justification has been given. The argument of the assessee that the opening balance of Rs. 3,07,80,727/-should not be considered for disallowance of interest is also not acceptable since firstly, the assessee has been unable to demonstrate that a part of this relates to trading transactions with M/s Om Kailash Cotton despite being given several opportunities and secondly, since assessee has been unable to demonstrate with any supporting evidence that interest-free funds were utilis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
