2014 (5) TMI 393

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.... ORDER   Per : Shri T. R. Meena, Accountant Member This is an appeal at the behest of Revenue which has emanated from the order of CIT(A)-VIII, Ahmedabad, dated 18.10.2012 for assessment year 2006-07. The sole ground of Revenue's appeal is against deleting the disallowance of Rs.71,43,000/- on account of interest expenses. 2. The A.O. observed that the assessee has borrowed fund....

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....gh the assessment order, the re-assessment order and the submission of the appellant carefully. The assessing officer has disallowed an amount of Rs. 71,43,000/- and added to the income of the appellant company on the ground that the appellant has diverted its income by charging interest at lower rate than at the rate on which amount was borrowed by them. The appellant has submitted that the net i....

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....ning 29.68 + closing 32.17) on which we have paid total interest of Rs.258 lacs i.e. the average cost of the funds is around 8% whereas we have charged the interest from the associate company @ 10% i.e. 25% higher than the average cost to the company". After going through the submission of the appellant, it is seen that appellant is charging more % of interest on the advances given than what he is....

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....he A.O. At the outset, ld. Counsel for the appellant reiterated the submission made before the A.O. as well as CIT(A). Ld. A.R. further argued that assessee had share capital at Rs.3.5 crore and reserve & surplus of Rs.24.25 crore. The assessee has profit during the year Rs.15.68 crore. The turnover has increased substantially from Rs.69.52 crore in preceding year to Rs.114.01 crore in the year un....