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TMI Blog2024 (6) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment proceedings, the Assessing Officer noticed that during the year under consideration the assessee had invested Rs. 175.9 crores in various group companies. On verifying the profit and loss account, he found that the assessee during the year had incurred interest expenditure of Rs. 72.82 crores and bank finance charges of Rs. 28.95 crores towards borrowings. He observed that since the assessee had sufficient own funds, he could have utilized them for investment purposes, thereby prevented borrowings from banks and financial institutions on payment of interest. He further observed that the assessee had made investments in group companies without receiving any interest. Therefore, applying interest rate at 12%, he disallowed an amount of Rs. 21.11 crores, out of the interest expenditure. The assessee contested the aforesaid disallowance before learned first appellate authority. However, the disallowance was sustained. 4. Before us, learned counsel appearing for the assessee submitted that the investments are made in equity and preference shares of group companies, hence, they are not in the nature of loans and advances, which could have earned interest. He further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled legal principle, it has to be presumed that interest free funds available with the assessee have been invested in acquisition of shares of group companies. In any case of the matter, it is observed that identical disallowances were made by the Assessing Officer in assessment years 2002-03, 2003-04 and 2005-06. While deciding the issue, learned first appellate authority deleted the disallowances. While deciding the appeals filed by the Revenue in ITA No.4673/Del/2005 & Ors., the Tribunal vide order dated 06.03.2019 upheld the decision of learned first appellate authority. On going through the aforesaid order of the Tribunal, we find parity of facts between the impugned assessment year and the appeals for other assessment years decided by the Tribunal. That being the factual position on record, we delete the disallowance made under section 36(1)(iii) of the Act. This ground is allowed. 8. In ground no. 2, the assessee has challenged disallowance of Rs. 62,53,675/- claimed towards cost of acquisition of land. 9. Briefly the facts are, the assessee had purchased leasehold land at Pune for its tractor division in financial year 1998-99 from Maharashtra Industrial Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has challenged disallowance of long term capital loss of Rs. 4.72 crores on sale of shares of Escorts Hospital & Research Centre Ltd. (EHRCL) 14. We have heard the parties and perused the materials on record. Facts on record reveal that in course of hearing before the first appellate authority the assessee had furnished certain additional evidences, however, rejecting such additional evidences, learned first appellate authority has sustained the disallowance. In our view, the additional evidences furnished by the assessee will have a crucial bearing for deciding the issue. Therefore, such evidences should not be rejected without verifying their authenticity. 15. In view of the aforesaid, we restore the issue to the Assessing Officer for deciding afresh after considering all the evidences, including the additional evidences filed by the assessee before learned first appellate authority. Needless to mention, the Assessing Officer must provide due and reasonable opportunity of being heard to the assessee before deciding the issue. Ground is allowed for statistical purposes. 16. In ground no. 4, the assessee has raised the issue of disallowance of long term capital loss of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. While giving effect to the order of learned Commissioner (Appeals), the Assessing Officer determined interest on income tax refund about Rs. 4.28 crores, which according to the assessee, was offered to tax. Thus, it is the case of the assessee before us that once the interest on income tax refund is withdrawn, the addition made deserves to be deleted. 22. Having considered rival submissions, we are of the view that assessee's claim needs to be factually verified by the Assessing Officer having regard to the facts and evidences brought on record. Therefore, we restore this issue to the Assessing Officer for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee. Ground is allowed for statistical purposes. 23. In the result, assessee's appeal is partly allowed. ITA No.6191/Del/2018 (Revenue's Appeal) 24. In ground no.1, the Revenue has challenged deletion of disallowance of foreign as well as domestic travel expenses. 25. Briefly the facts are, in course of assessment proceedings, the Assessing Officer noticed that the assessee has debited foreign travel expenses of Rs. 51,58,466/- and domestic travel expenses of Rs. 2,21,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer, the assessee submitted that such expenses include personnel expenses, sales and administration expenses, purchase/raw material consumption and operating expenses etc. Stating that such expenses pertained to earlier years and the assessee is following mercantile system of accounting, the Assessing Officer disallowed them. While deciding the issue in appeal, learned first appellate authority found that the major part of the expenses pertained to sales incentives payable to dealers of assessee's tractor division for the financial year 2002-03. He has further given a factual finding that the claim of incentives has to be based on aggregate performance for the year, hence, it is not possible for the assessee to verify the claim of incentives by the dealers on closure of account on 31.03.2003. However, it was factually found that the sales promotion expenses actually crystallized/finalized on 30.06.2003 falling in financial year 2003- 04 corresponding to assessment year 2004-05. Thus, the liability to pay the expenditure accrued in the assessment year under dispute. That being the case, it cannot be treated as prior period expenses. It is worth mentioning that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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