TaxTMI 
TaxTMI 
2015 (5) TMI 425
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....ssment on the total income of Rs. 2,16,43,241/- by making various additions u/s. 143(3) of the Act. 3. Against the aforesaid order of the Assessing Officer, assessee appealed before the Ld. CIT(A), who vide his order dated 26.2.2013 has partly allowed the appeal of the assessee. 4. Now the Revenue and Assessee are in appeal and cross objection respectively before us on this issue. 5. The Revenue has raised the following effective grounds in its Appeal:- "(1) Whether in the facts and circumstances of the case, the Ld. Commissioner of Income tax (Appeals) has erred in law in restricting the addition of Rs.l,72,93,100/- to the amount of Rs. 15,24,100/- on the incorrect grounds that (a) parties were not financial institutions and (b) Interest was not claimed in the P&L a/c whereas the interest bearing loans were admittedly from state governments ( virtual financial institutions giving loans to assessee) and the assessee has debited entire interest of Rs. 5,42,30,719/- and claimed entire sum in its P& L A/c against which Ld. CIT(A) wrongly held that merely Rs. 15,24,100/- were claimed by the assessee in the P&L a/c. (2) Whether in the facts and circumstances of the case, the Ld. Co....
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....inlease Pvt. Ltd. 18 Taxmann 217" 6. The Assessee has raised the following grounds in its Cross Objection:- "1. That on the facts and in law making disallowing u/s. 43B to Rs. 15,24,100/- is totally wrong, unjustified and illegal. In assessment order the AO has treated various institutions of UP Government as financial institutions within the meaning of section 43B(d) and accordingly disallowed a sum of Rs. 1,72,93,001/- u/s. 43B(d) of the Act. The AO make disallowance not on the basis of the interest charged in profit and loss account i.e. Rs. 15,24,100/- but disallowed Rs. 1,72,93,001/- as shown in the balance sheet. In Appeal order Ld. CIT(A) has accepted that the institutions of State Government are not financial institutions as defined in section 43B(d) of the Act. But CIT(A) has confirmed addition of Rs. 15,24,100/- as the amount charged in profit and loss account, u/s. 43B(d) of the Act. The disallowance made for Rs. 15,24,100/- u/s. 43B(d) deserves to be deleted in full." 7. Ground Nos. 5 and 6 of the revenue are general in nature, so we dismiss the same. 8. Ground No.1 of the revenue and the sole ground of the CO preferred by the assessee are in respect of restrictio....
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.... advances in Schedule H of the final accounts. On consideration of the above plea the ld CIT(A) has restricted the addition to Rs. 15,24,100/-. Before us the ld AR submitted that the respondent had received loans from two institutions of U.P. Government namely U.P.Co-operative Sugar Factories Federation and Shakkar Vishesh Nidhi. He further submitted that during the year under consideration respondent has debited a sum of Rs. 15,24,100/- as interest in its profit & loss account on loan from Shakkar Vishesh Nidhi as appearing in schedule 'P'; that as per AO a total sum of Rs. 1,72,93,100/- was remaining unpaid on U.P. Government institutions. He further submitted that the interest of Rs. 1,72,93,100/- was never debited to profit & loss account as observed by CIT(A) in his appeal order in para 2.2 and also submitted that section 43B(d) talks about interest payable on any loan & borrowing from any public financial institutions in accordance with the terms & conditions. The explanation 4 defines the term public financial institutions as defined in section 4A of the Companies Act 1956. These loans have been provided by U.P. Government to clear the outstanding cane dues of farmer....
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....s allowed for statistical purpose and the ground raised by the revenue is dismissed. 8.3 In the result, the ground no. 1 raised by the Revenue in its appeal is dismissed and the Ground no. 1 raised by the Assessee in its cross objection is allowed for statistical purpose, in the aforesaid manner. 9. With regard ground no. 2 and 3 raised by the Revenue are concerned, we find that the AO made addition of Rs. 1,36,04,397/- made on account of difference in sales price of molasses. The AO had valued the average rate of sale of molasses at Rs. 435.83 per quintal in place of Rs. 373.09 shown by the assessee. The AO had compared the selling rate of the appellant with that of another unit namely Baghpat Cooperative Sugar Mills Ltd (BCSML). We find that the in the assessment order, the AO noted that the assessee was engaged in the business of production and trading of sugar. The assessee was asked to explain why the closing stock of products and the by products should not be taken at the value shown by another entity BCSML. The AO noted that this concern as well as the assessee are in the same business, and are situated in the similar area and are controlled by the U.P. Govt. In the assess....
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....rk to be applied to the assessee and not the rate of SBEC or any average rate of the three concerns for which the figures were available?. Thirdly, the ld CIT(A) noted that the rate per quintal of sugar as shown by the assessee is product of a concern throughout the year or was the rate variable and the AO has adopted an average rate. The ld CIT(A) rightly observed that the point which has not been appreciated by the AO is that any product could have variable rate of sales depending upon the quality of the product, the geographical area in which the product is marketed, the time when sales have been effected etc. Molasses can be put to diverse uses such as an input in the chemical industry, for making of ethanol, for the manufacture of potable liquor etc. Further he rightly observed that the pricing also depends on whether sales have been effected in the crushing season when the prices are low or in the period of deficiency when prices are high. Ld CIT(A) has rightly observed that if there is a significant difference in the rate of sale between one concern and another can be the starting point of investigations and the AO would be competent to ascertain whether there is a case of u....
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....e books of accounts has taken place and differential sale proceeds have been received no addition can be estimated without rejection of books of account. We also find considerable cogency in the assessee's counsel contention that molasses is an excisable commodity and no movement of molasses can take place without approval from excise department, the representatives of them are stationed inside the factory premises. In the case under consideration, we find that the AO has made no adverse comment with regard to the books of account. In view of the above the addition made was rightly deleted and we confirm the same. We also find that AO has made similar addition of Rs. 2,00,764/- made on account of difference in the sale price of bagasse. For the same reasons stated above he rightly deleted this addition also. In the background of the aforesaid discussions, we do not find any infirmity in the well reasoned findings of the ld. CIT(A) with respect of ground no. 2 and 3, hence, we uphold the same. In the result, the ground No. 2 & 3 raised by the Revenue are rejected. 11. With regard ground no. 4 raised by the Revenue regarding addition of Rs. 10,54,351/- on account of credit balance o....