TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 1
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....ses of raw material at higher rates as compared to the market rates. 3. On the facts and in the circumstances of the case, the Ld. CIT(A)-II, Ludhiana has erred in law and on the facts of the case while deleting the addition of Rs. 22,41,628/- on account of capital nature bank charged debited by the assessee to profit and loss account by the treating these as revenue expenditure. 4. On the facts and in the circumstances of the case, the Ld. CIT(A)-II, Ludhiana has erred in law and on the facts of the case while deleting addition of Rs. 3,06,251/- of capital nature expenditure debited by the assessee to profit and loss account by treating these expenses as revenue expenditure. 3. The issue in ground No. 1 raised by the revenue is against the deletion of addition made under section 36(1)(iii) of the Act. 4. The brief facts relating to the issue are that the assessee was engaged in the business of manufacturing and sale of denim fabrics. During the course of assessment proceedings, the Assessing Officer noted that the assessee had advanced interest free advances to its subsidiary company at Rs. 112 lacs. The assessee was show caused to explain as to why the corresponding interest ....
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....rit any disallowance of interest because of business exigency. We further find that similar issue arose before the Tribunal in assessee's own case relating to assessment year 2005-06 and 2006-07 wherein the Tribunal vide separate orders dated 29.07.2009 and 28.02.2011 had allowed the claim of the assessee upholding the order of Commissioner of Income Tax (Appeals). In view thereof, as the facts and circumstances are identical to the facts and circumstances in preceding years, we uphold the order of Commissioner of Income Tax (Appeals). However, the issue decided vide present ground of appeal shall not be a precedent used by any other assessee. The ground of appeal No. 1 raised by the revenue is thus, dismissed. 10. The issue in ground of appeal No. 2 raised by the revenue is against deletion of addition made under section 40A(2)(a) of the Act. The Assessing Officer observed that the assessee had made purchases from its sister concern M/s Malwa Cotton & Spinning Mills totaling Rs. 1,84,56,763/-. Further, similar purchases were made from independent parties. The assessee was asked to produce complete bills in respect of the said purchases. The Assessing Officer, on compari....
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....ing the month is because purchase piece of cotton comber waste and fine waste have been taken together. To see if the company has made excess payment it would be important to compare the item wise prices. As mentioned in the assessment order details for such purchases made on specific dates of the month of November 2006 from related concern and from parties other than the sister concerns were duly produced before the A.O. and it was contended that on the date on which flat waste was purchased from M/s Malwa Cotton Spinning Mills Ltd, the rates of same item purchased from outside parties was higher. However, the AO did not accept this explanation and this evidence and observed that the assessee has inflated the purchases made from M/S Malwa Cotton Spinning Mills Ltd. In my opinion the Assessing Officer was not justified in observing as above. I agree with the Ld. Counsel that the method adopted by the A.O. for comparing the rates of purchases made from the sister concerns is not correct method. In view of the fact that there are fluctuations in price of waste on day to day basis, the correct method is to compare the rates of purchases made by the appellant from sister concerns at a ....
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....processing fee paid by the assessee to bank to process the working capital facility in order to meet the day-to-day requirement of funds. The said working capital facilities were issued generally for a period of one year and the bank charges were levied each year on renewal of the said facilities. The Commissioner of Income Tax (Appeals) further noted that similar issue arose before the Tribunal in assessment years 2005-06 and 2006-07 and the said addition had been deleted by the Tribunal. In view thereof, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee, against which the revenue is in appeal. 16. On the perusal of the record, we find that this issue arose before the Tribunal in assessee's own case relating to assessment year 2005-06 and 2006-07 (supra). We find that the Tribunal in assessment year 2005-06 (supra) vide para 29 observed as under : "29. We have considered the rival submissions carefully. In para 5 of the assessment order, the Assessing Officer has referred to the details of loan processing charges amounting to Rs. 15,23,883/-. After enumerating the detail, it is noted by the Assessing Officer that the said sum is disallowable u/s 37 (....