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TMI Blog2009 (7) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals). 2. There are two issues in this appeal. The first issue pertains to disallowance of the loss of Rs. 5,64,90,487/- by the Assessing Officer which was suffered by the assessee on account of the share transactions. The Assessing Officer disallowed it on the ground that the transactions were entered into with group concerns and the Assessing Officer doubted the genuineness. The second issue pertains to disallowance of the claim of deduction of interest of Rs. 83,77,871/- on the ground that the assessee had given interest free advances amounting to Rs. 13.05 crores to its sister concern M/s. Mount Finance Company Pvt. Ltd. The Assessing Officer was, therefore, of the view that the expenditure was not incurred by the assessee wholly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness premises of the assessee various records/books/documents were seized. Therefore, the Auditor said that on the basis of the limited records, the report was being prepared and consequently they made the endorsement that they are not able to say that the accounts reflect the true and correct position. We note that in this regard the ITAT has observed that it was a strange position indeed for the Assessing Officer to simply accept the report of the Auditor, because, the seized material could have been examined by the Assessing Officer and he was competent to form an opinion on the same as to the genuineness of the transactions which he unfortunately did not. The ITAT rightly observed that on the one hand the Assessing Officer kept the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assesee. 6. On the second issue of the disallowance of the interest, we again find that the stand of the Department is misconceived. This is because it is a finding of fact recorded by both the CIT(A) and ITAT that the loan which was given to the sister company was before the loan which was taken by the assessee company from the Standard Chartered Bank. The ITAT has examined the copy of the account of M/s. Mount Finance Company Pvt. Ltd. for the financial year 1.4.1996 to 31.3.1997 which revealed that the advance was given to M/s. Mount Finance Company Pvt. Ltd. prior to the commencement of the relevant year and the amount which was borrowed from the Standard Chartered Bank was on or around 23.7.1996. Thus, in fact the Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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