2014 (7) TMI 865

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....llowance made by the A.O. on account of interest payment to the extent of Rs. 34,18,026/- without appreciating the fact that the genuinity and necessity of the claim could not be established by the assessee in spite of requisition during the assessment proceedings. 2. That on the facts and circumstances of the case, Ld.CIT(A) erred in law in deleting the addition made by the A.O. on account of notional interest on advance to tune of Rs. 7,62,917/- without considering the fact that the assessee had failed to offer any explanation about losing interest on this advance. 3. That on the facts and circumstances of the case, Ld.CIT(A) erred in law in deleting the disallowance made by the A.O. on account of deferred revenue expenditure of Rs.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....bout the charging of interest to the P & L Account. According to the appellant, thereafter, no further explanation was called for by the AO. On perusal of Schedule-20 of the P&L Account, it is observed that in the preceding assessment year also the appellant had claimed interest on account of debentures and term loan and same was allowed to him. In the year under consideration, the various term loan and debentures had been rescheduled in a manner that the rate of interest had been reduced to 13.5%. In Item No.5 on Notes on Account, the Tax Auditor made a specific note of this item and stated as to how interest of Rs. 34,18,026/- was calculated and debited to the P&L Account. I find no reason that the genuinity or the necessity of the claim ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ons of the assessee in this regard. Needless to add the assessee may be given adequate opportunity of being heard. 6. Apropos ground no.2 : Notional interest on advance : On this issue the AO noted that a sum of Rs. 7,62,917/- was lying with M/s. Sheffield Appliances Ltd. The assessee explained that the assessee has made advance to M/s.Sheffield Appliances Ltd. in the earlier years and balance amount was lying with them. However the AO was not satisfied. He made an addition of notional interest on the above advance @12% and added Rs. 7,62,917/- to the income of the assessee. 7. Upon assessee's appeal the ld. CIT(A) held that there was no question of charging notional and held that it is also an accepted principle that trading advance ....