TaxTMI 
TaxTMI 
2011 (9) TMI 187
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.... the facts and circumstances of the case the CIT(A) has erred in deleting the interest of Rs.12,60,45,571/- on the amount receivable from Punjab Government while paying interest on loans raised to run the business. 5. On the facts and circumstances of the case the CIT(A) has erred in deleting the interest of Rs.62,50,99,650/- on the amount receivable from FCI while paying interest on loans raised to run the business. 6. On the facts and circumstances of the case the CIT (A) has erred in deleting the addition of Rs.21,68,942/- made by the A.O. on account of advertisement expenses claimed as there were no business exigencies for incurring such expenditure. 7. On the facts and circumstances of the case the CIT (A) has erred in deleting the addition of Rs.12,73,462/- in view of the provisions of section 14A of the IT Act." 3. The assessee has raised the following grounds: "1. The Ld. CIT (A) has erred in sustaining disallowance of interest u/s 36(1)(iii) on advances of Rs.7.01 crores to Sugar fed. The Ld. CIT (A) failed to appreciate the facts and circumstances of the case. Moreover, charging of interest does not increase taxable income of the society a....
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....) on interest free advance of Rs.7.01 crores as against Rs.17.01 crores considered by the Assessing Officer was upheld. The issue raised vide ground No.1 in the present appeal is identical to the issue raised before the Tribunal in assessee's own case relating to assessment year 2006-07 and following the order dated 30.6.2010 we dismiss the ground No.1 raised by the assessee. 7. The issue raised in ground No.2 by the assessee is against the addition made u/s 40(a)(ia) of the Act. The Assessing Officer from the books of account noted the assessee not to have deposited tax at source amounting to Rs.73,217/- before the due date of filing the return of income. The Assessing Officer further noted that the assessee, in the return of income while computing the income, had not added Rs.73,217/- as disallowance u/s 40(a)(ia) of the Act. The assessee was asked to furnish the details of the total amount on which TDS of Rs.73,217/- was deducted. In the absence of any details being filed by the assessee, the Assessing Officer held that tax had been deducted @ 1% and consequently the total amount was worked out at Rs.73,21,700/- and addition of the same was made u/s 40 (a)(ia) of ....
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.... of Rs.5,44,940/-. The CIT (Appeals) has rejected the plea of the assessee observing that no cogent reasons were forwarded by the assessee in respect of the said additional evidence being now furnished during the appellate proceedings. In the facts and circumstances of the case, we find merit in the plea raised by the assessee that it was prevented by a reasonable cause in not furnishing information before the Assessing Officer and in view of the provisions of Rule 46A of the Income Tax Rules such information should have been admitted and addressed by the CIT (Appeals). We find merit in the claim of the assessee and admitting the aforesaid additional evidence, we are of the view that the same needs verification at the level of the Assessing Officer. Accordingly, we direct the Assessing Officer to verify whether the TDS of Rs.73,217/- is relatable to the payment of Rs.5,44,940/- which relates to the period upto 31.3.2004. In case the claim of the assessee is found to be correct, there is no merit in any addition on this account as the provisions of section 40 (a)(ia) of the Act were introduced w.e.f. 1.4.2005 by the Finance (No.2) Act, 2004. The a....
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.... of the order of the CIT (Appeals). 18. We find that the issue raised in the present grounds of appeal is identical to the issue raised before the Tribunal in assessee's own case in appeal filed by the Revenue relating to assessment year 2006-07. The Tribunal in ITA No.875/CHD/2009 alongwith ITA No.802/CHD/2009 (assessee's appeal) relating to assessment year 2006-07, order dated 30.6.2010, vide para 22 held as under: "22. We have considered the rival submissions carefully. The assessee before us is a Co-operative Society, which is an agency of the State Government for procurement of wheat and paddy. It also undertakes such activities for FCI. In the course of carrying on of such activities, it incurred amounts which were recoverable from the State Government and FCI. Quite clearly, such recoveries are on account of trading activities carried out by the assessee. Therefore, the amount outstanding for recovery at the end of the year on account of such activities cannot be equated to interest-free advances so as to require the same to be decided in terms of Section 36(1) (iii) of the Act. In this regard, the CIT (Appeals) has categorically held that the Punjab Government and FCI....
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....er was of the view that at the most the expenditure was donation for the promotion of sports and was not wholly and exclusively incurred for the purpose of business of the assessee. Accordingly, a sum of Rs.21,68,942/- was disallowed by the Assessing Officer. The CIT (Appeals) noted that similar issue arose before the Tribunal in assessment year 2005-06 in ITA No.727/Chd/2009 and vide order dated 30.10.2009 the entire expenditure was allowed as business expenditure. The findings of the Tribunal in ITA No.727/Chd/2009 are reproduced by the CIT(Appeals) at pages 12 and 13 of the appellate order. 22. We find that the present issue raised vide ground No.6 is identical to the issue raised before the Tribunal in assessment year 2005-06 and following the ratio laid down by the Tribunal we uphold the order of the CIT(Appeals). For the sake of brevity we are not reproducing the extract of the order of the Tribunal which is incorporated at pages 12 and 13 of the appellate order though a reference is being made to the same. Ground No.6 raised by the Revenue is thus dismissed. 23. Ground No.7 is in connection with the provisions of section 14A of the Income Tax Act. The assessee had made....
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....ior to 1994 and on the said investments no dividend has been received by the assessee during the year. The assessee had received the dividend of Rs.3,96,000/- from Indian Potash Supply Agency Madras, in which the investment was made between the years 1970 to 1975. Another dividend of Rs.4410/- received from Central Warehousing Corp. Ltd. In which the investment was made during the years 1950 to 1962. No fresh investment has been made during the year under consideration. The CIT (Appeals) at page 17 of the appellate order had reproduced the observations of the Hon'ble Punjab & Haryana High Court in CIT Vs. Winsome Textile Industries Ltd.(supra), under which it was laid down that where there is nothing to indicate that investment in purchase of shares was made out of borrowed funds, no disallowance was warranted u/s 14A of the Income Tax Act. Following the above said ratio laid down by the Jurisdictional High Court in CIT Vs. Winsome Textile Industries Ltd.(supra) and followed in CIT Vs. Metalman Auto P. Ltd. (supra) we find no merit in the grounds of appeal raised by the Revenue in this regard. The total dividend income received by the assessee was Rs.4,00,41....