TaxTMI 
TaxTMI 
2015 (5) TMI 903
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....the assessee carried the matter before the Ld CIT(A) who vide order dated 12.09.2011 granted substantial relief to the assessee. Aggrieved by the aforesaid order of the Ld CIT(A), the Revenue is now in appeal before us and the assessee has also filed cross-objection. 4. The Grounds raised by the Revenue in its appeal read as under:- 1. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 15,15,785/- made by the Assessing Officer, on account of rejecting the books results u/s 145(3), fall in Gross Profit / difference in sales. 2. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the disallowance of Rs. 13,93,195/- made by the Assessing Officer on account of interest expenses. 3. On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad ought to have upheld the order of the Assessing Officer. 4. It is therefore prayed that the order of the Ld. Commissioner of Income- Tax (Appeals)-XX, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 5. On the other hand, the assessee has ta....
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.... and reconciliation of purchases and sales of Isabghula seeds was furnished to the AO vide letter dated 27-1-2010; the books of accounts of the appellant are duly audited u/s 44AB; the reasons for fall in GP were explained in the letter dated 26-11-2010 submitted to the AO and therefore impugned addition was uncalled for, both on facts and in law. 4.3 I am inclined to accept the contentions of the learned AR. The impugned amount of Rs. 15,15,785/- represented loss of 43,555 Kgs of Ispaghula seeds, duly accounted for in the audited account of the appellant. The basis on which the reconciliation of the seeds submitted by the appellant and the reasons for the fall in GP explained by the appellant were rejected by the AO, is not found logical. Therefore, I hold that the impugned addition is not sustainable. It is deleted. These grounds of appeal are allowed. 9. Aggrieved by the aforesaid order of the ld. CIT(A), the Revenue is now in appeal before us. Before us, Ld. Departmental Representative supported the order of the Assessing Officer. On the other hand, ld. Authorized Representative of the assessee reiterated the submissions made before the Assessing Officer and the ld. CIT(A....
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....ing loans. He accordingly calculated the interest expenses at 9% on the amount advanced and worked out the interest expenses of Rs. 9,08,966/- and thus made an aggregate disallowance of Rs. 18,88,846/-. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A). The ld. CIT(A), after considering the submissions of the assessee, granted partial relief by holding as under:- "5.3 While making the impugned disallowance, the AO observed that appellant had borrowed funds at the rate of 9% and advanced to M/s. Swati Autolink P.Ltd. at a lower rate of 6.75%. Accordingly, he calculated interest @ 2.25% on the loan advanced of Rs. 4,35,50,183/-; and worked out the addition of Rs. 9,79,830/-. Further, the AO calculated interest at the rate of 9% on the interest free loans given to 5 other concerns totaling to Rs. 1,00,99,625/- and worked out the disallowance of Rs. 9,08,966/-. Put together he made disallowance of Rs. 18,88,846/-. 5.4 The contentions of the learned AR in this regard in brief are as follow: AO did not consider the detailed submission made by the appellant vide his letter dated 1-12-2010.; the advance given to Swati Autolin....
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.... of CIT vs. Reliance Utilities and Power Limited, reported in (2009) 313 ITR 340 (Bom) and Gujarat High Court in the case of CIT vs. Raghuvir Synthetics Ltd, reported in 354 ITR 322. He further submitted that the amount had been advanced in earlier years also but no disallowance was made in the earlier years and therefore, no disallowance can be made in the year under consideration and for which he placed reliance on the decision of Hon'ble Karnataka High Court in the case of CIT v. Sridev Enterprises, reported in (1991) 192 ITR 165 (Kar). He further submitted that no disallowance at all on account of interest was called for. 15. We have heard the rival submissions and perused the material available on record. It is undisputed fact that during the year under consideration, the assessee has earned net interest income of Rs. 11,81,410/-. Before us, the ld. Authorized Representative also pointed out to the cost of fund, the rate at which it has lent and from the statement submitted by the ld. AR, it is seen that the amount which has been lent to M/s. Swati Autolink Pvt Ltd is at a higher rate than the weighted average cost of funds. Before us, it is also the assessee's submission t....