2015 (11) TMI 545

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....ng substantial questions of law:- A. Whether, on the facts and circumstances of the case, the Tribunal was justified in concurring with the orders of authorities below in treating the advances for purchase of raw material from two concerns being trade creditors as interest free loan without any documentary evidence on record to support the contentions of Revenue and thus against the principles of commercial expediency as so held by the Hon'ble Supreme Court of India in the case of S. A. Builders vs. CIT 288 ITR 1 (SC)?. B. Whether the order of the Tribunal is perverse and against the provisions of law? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The appellant-assess....

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....er transactions while even for the year under consideration it received goods on 23.8.2005 wherein a sum of Rs. 2,27,590/- was paid on 9.9.2005 for purchase of goods whereas the earlier amount was outstanding. However, for the year under consideration i.e. Assessment year 2006-07, the CIT(A) by concurring with the order of the Assessing Officer, dismissed the appeal of the appellant vide order dated 18.3.2009, Annexure A.2. The assessee went in appeal before the Tribunal. Vide order dated 14.12.2009, Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the appellant-assessee. 3. We have heard learned counsel for the parties. 4. Learned counsel for the appellant-assessee submitted that similar matter was considered ....

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....to the above said two firms which came to Rs. 2,11,512/-. The CIT (A) affirmed the said findings which read thus:- "9. I have considered the facts of the case and the submissions of the assessee. From the submissions of the assessee and from the copy of account, it is clear that the advance of Rs. 15,00,000/- was given to M/s Chirag spinning Mills in F.Y.2004-05 or earlier and therefore, in F.Y 2005-06, it is shown an opening balance only and the same remained outstanding for the whole year. The assessee has not filed any evidence to show that the advance was made for purchase of yarn or for any other business transaction. Generally the business practice is that first the goods to be purchased are selected and if necessary the samples are....

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....llowance of interest is called for. In this regard, learned counsel referred the decision of the Hon'ble Apex court in the case of Munjal Sales Corporation vs. CIT, 298 ITR 298, SA Builders vs. CIT 288, ITR 1 and Hon'ble Madras High Court in the case of CIT vs. Savera Hotel CTR 148 ITR 585. Learned counsel also claimed that above parties were not related to the assessee. 6.1 Learned DR on the other hand submitted that it has been a categorical finding in orders of the authorities below that the parties are related and assessee has incurred interest in obtaining the funds and at the same time has given interest free advance to these concerns. Learned DR further pointed out that the decisions relied upon by the learned counsel of th....