TaxTMI 
TaxTMI 
2012 (5) TMI 216
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....estion of law which according to him arise out of the Tribunal and require adjudication by this Court:- "1. Whether on the facts and circumstances of the case the Hon'ble ITAT was legally justified in dismissing the disallowance on account of proportionate interest on advances given to M/s Standard Sulphonators Ltd. and M/s Uniflex Industries Ltd., when the A.O. has established that the advance has been made out of interest bearing borrowed funds and the investment was not for business purpose. 2. Whether on the facts and circumstances of the case, the Hon'ble ITAT was legally justified in dismissing the additions under the head bad and doubtful debts, balances written off and additions u/s 41 of the I.T.Act, 1961 without appreciating the....
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.... at Rs.2,14,742/-. The Assessing Officer was of the view that the assessee had charged interest on various advances/deposits made to various persons and has also paid interest on advances/ loans taken by it. Therefore, he disallowed sum of Rs.31,60,273 towards interest paid on loans which have not been utilised for business purposes. While examining the books of account, the Assessing Officer found that the assessee had written off a sum of Rs.5,81,875 as bad debts which did not relate to the business purpose. Another item which he disallowed was in respect of exchange rate difference. The total disallowance made on this account was Rs.5,63,427/- on the ground that the same related to contract for forward business in foreign exchange and no....
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....pur wherein it is certified that the property owned by M/s Standard Sulphonators Ltd. was pledged with the bank as security against lona provided to the assessee. The value of the said property as per valuation report dated 20.9.2007 was Rs.2.25 cores. Since the company, M/s Standard Sulphonators Ltd. had provided its land as security to the bank against loan taken by the assessee and in lieu of that the assessee deposited a sum of Rs.50 lakhs with the said company i.e. M/s Standard Sulphonators Lted., so it cannot be said that the said amount of Rs.50 lakhs was an interest free advance or loan. Therefore, the Assessing Officer was not justified in making the disallowance on account of notional interest on the said deposit. It is also notic....
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....stion. Therefore, the ld. CIT (A) rightly deleted the addition made by the Assessing Officer. We do not find any infirmity in the order of the ld. CIT (A) on the issue. Ground No.1 of the appeal is dismissed." 19. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is no in dispute that the assessee had written off the bad debts and the balances outstanding which were not recoverable. The Assessing Officer also accepted this fact that those amounts were written off in the books of account. The Hon'ble Supreme Court in the case of T.R.F. Ltd. vs. CIT (2010) 323 ITR 397 (SC) has held as under:- "After the amendment of section 36 (1) (vii) of the Income-T....
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....g so, the assessee-company reduced its cost of borrowings to 11.021% including the premium cost as against 14.5% interest charged by the bank on cash account. The ld. CIT (A) verified the calculations furnished by the assessee and came to the conclusion that no element of speculation in the transaction was there. Since the transaction in question was a business transaction, therefore, the disallowance made by the Assessing Officer was not justified and the ld. CIT(A) rightly deleted the same. We do not see any valid ground to interfere with the findings of the ld. CIT (A) on the issue. Hence ground no.3 is dismissed. We have heard Sri Shambhu Chopra, learned senior standing counsel appearing for the Revenue and Sri Suyash Agrawal, learned ....
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....t is clearly a business transactions as no one would come forward to offer its property to another person for securing loans/advances by the bank unless that person secures his liability. So far as the deposits given to M/s Uniflex is concerned, we find that the two companies had business dealing and it was a running account in respect of payment and purchases made by the assessee from the M/s Uniflex. That is why the balance as on April 1, 2001 which was Rs.5569854-/ on the first date of previous year relevant for the assessment year 2002-03 in question which was reduced to Rs.2,14,742/- on the last date of previous year i.e. 31.3. 2002. These figures have been taken from ledger account of M/s Uniflex Industries Ltd. appearing in the asses....