TaxTMI 
TaxTMI 
2015 (11) TMI 545
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....e assessment year 2006-07, claiming following 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 ....
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....n Financial Year 2004-05 (Assessment year 2005-06) was on account of earlier 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 co....
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....he loan raised by it to the extent the amount was advanced on interest free basis 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 pract....
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....cords. Learned counsel of the assessee reiterated that these were trade advances and hence no disallowance 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 t....
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....regard cannot be said to be unjustified." 8. The Assessing Officer, CIT(A) and the Tribunal had concurrently concluded that the advance to M/s Chirag Spinning Mills amounting to Rs. 15 lacs appearing as opening balance had remained outstanding at the end of the year. The assessee had failed to show that the advance was made for purchase of yarn or for any other business transaction. Similarly, in the case of Dina Nath & Sons, there was opening balance of Rs. 2,69,659/- whereas against another purchase of Rs. 2,29,890/-, the assessee had made payment of Rs. 2,27,590/- retaining outstanding balance of Rs. 2,67,359/-. It was also held not to be for business purposes as the assessee had failed to explain why the purchase made during the year....