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TMI Blog2024 (2) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in confirming the disallowance of Rs. 85,86,000/- in respect of interest expenses alleging that the assessee has foregone interest by giving interest free advance to various parties. The disallowance confirmed by CIT(A), without appreciating the facts of the case, on surmises and conjectures, on notional basis and deserves to be deleted. (b) The appellant contends that the loans and advances are for commercial and business expediency as has been held in the earlier year by the appellant authorities. Further there is no finding of any diversion of any interest bearing funds. Hence no interest expenditure should be disallowed. (c) The Ld. CIT(A) has failed to appreciate the fact that the issue is covered in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ignoring the fact that up to AY 2005-06, the assessing officer has already taxed value of stock aggregating to 1,65,442 bags as undisclosed stock allegedly not reflected in the books stating that cost of such production has been borne by payments outside the regular books of accounts. Having taxed as alleged value of stocks outside books the benefit of costs should be allowable to the assessee in this year. 4. The above grounds are independent and without prejudice to one and other. 5. The appellant may be allowed to add, amend and forgo any of the ground at the time of hearing." 2. In grounds no. 1 and 2, the assessee challenged the disallowance of interest expenses amounting to Rs. 85,86,000/-. 3. Briefly stated the facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier years; secondly, that the issue has been decided by the Tribunal in favour of the assessee in earlier Assessment Years. In this context, Ld. Counsel relied upon the decision of the Coordinate Bench in case of the assessee in ITA no. 3969/Del/2010 vide order dated 30.11.2017. 5. We have considered rival submissions and perused the materials on record. On perusal of the balance sheet of the assessee for the current year, we find that the assessee had sufficient interest-free surplus funds available with it. Therefore, as per the settled legal principles, it has to be presumed that the interest-free surplus funds have been utilized for interest-free advances. In any case, it is a fact on record that the loans in respect of which interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which are higher than the amount of advance to the sister concerns. The Ld. departmental representative could not point out any infirmity in the order of the Ld. I appellate authority. In view of this, we confirm the finding the finding of the Id CIT appeal in deleting the disallowance of Rs. 15004133/- u/s 36(1)(ii) of the Act. In the result ground no I of the appeal of the revenue is dismissed." 8. The case of the assessee further supported by the decision of the Hon'ble Bombay High Court in case of CIT Vs. Reliance Utilities and Power Ltd 313 ITR 340 wherein it has been held that if the assessee has higher noninterest bearing funds available then the non interest bearing advances, then the presumption lies in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, applying GP rate of 7.38% to Rs. 2542.4 lakhs, he added back Rs. 1,87,63,000/- in this year. The addition so made by the assessing Officer was upheld by Ld. First Appellate Authority. 9. We have considered rival contentions and perused the materials on record. It is observed that based on the alleged variation in stock declaration before the bank and the stock as per books of account; the Assessing Officer has made an addition in the assessment year 1999-2000. Based on such addition, the assessing officer has made the impugned addition in the current assessment year. Pertinently, while deciding the issue relating to alleged variance in stock position in assessment year 1999-2000, Ld. First Appellate Authority has deleted the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me source, namely the statement as on 31.03.1998 as furnished to the bank. This preposition is based on the principle of consistency in approach as it would be improper to place reliance on the book stock for opening balance and in the same breadth the bank statement for closing balance. Therefore, the opening stock of sugar (which has been duly verified by the Central Bank of India vide letter dated 2.9.2013, in response to notice u/s 133(6) of the Act) as well as the closing stock of sugar, if both are considered as per the statement given to the bank then what remains is quantitative difference of only 3 Otls. of sugar which is practically negligible. Therefore seen from this perspective too there is no ground for making addition to i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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