2014 (7) TMI 385

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....)(iii) of the Income Tax Act. The assessee has also agitated the finding of the lower authorities to the effect that alternatively the said interest disallowance of Rs. 97,51,956/- was also attracted under section 43B(e) of the Act, because the interest as claimed to have been paid by the assessee to the bank was actually neither paid nor was shown as payable/outstanding in the balance sheet. 2. The brief facts of the case are that the assessee company is engaged in business of manufacturing of polyester yarn and dealing in cotton yarn and waste. During the year under consideration, the assessee company debited an amount of Rs. 69,76,984/- to its profit and loss account on account of interest paid on loans taken from banks amounting to R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....submissions as made before the A.O. It was submitted that the interest bearing loans taken for the purpose of business were totally utilized for the purpose of business. It was submitted that interest free advances were given to sister concerns on account of commercial expediency and no disallowance of interest was called for. 5. However, the ld. CIT(A) was not satisfied with the explanation given by the assessee and upheld the disallowance made by the AO observing as under: "3.4 I have considered the findings of the Assessing Officer and submissions of appellant. The appellant has relied on the decision of CIT(A) as well as on the decision of Supreme Court in the case of M/s. S.A. Builders Limited Vs. CIT 288 ITR 164 wherein it was h....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....eal before us. 7. At the outset, the ld. A.R. for the assessee submitted that the identical issue came for consideration before the Tribunal in the own case of the assessee in the preceding assessments years i.e. assessment year 2002-03, 2004-05 & 2005-06 and the Tribunal has restored the issue to the file of the AO. He has produced before us a copy of the order of the Tribunal dated 15.07.11 passed in ITA No.5709/M/09 in the own case of the assessee for assessment year 2005-06. We find that the Tribunal following the earlier years' decision in the own case of the assessee for assessment years 2003-04 & 2004-05 has restored the matter back to the file of the AO, observing as under: 5. We have considered the rival arguments made by bot....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is allowed for statistical purposes." 8. The ld. A.R. has further relied upon an authority of the Hon'ble Bombay High Court in the case of "CIT vs. Upendra T. Kapadia (2013) 256 CTR (Bom) 201" to contend that the alternate finding of the lower authorities that otherwise disallowance was attracted under section 43(B) of the Act, is also legally not sustainable as it has been held by the Hon'ble Bombay High Court that the non-payment of interest amount to a Co-Operative bank would not attract provision of the section 43(B). 9. Since....