TaxTMI 
TaxTMI 
2016 (3) TMI 186
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....10. Concise grounds of appeal are as under :- 1. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance of interest of Rs. 3,58,015/- attributable to investment in shares . 2. That the learned CIT(A) has grievously erred in law and on facts, in confirming the addition of Rs . 3,50,000/- made on account of unaccounted sales . 3. The appellant craves leave to add, alter, amend any ground of appeal. . 4. Briefly stated facts are that the assessee is a limited company deriving income from property and agency commission on sales of products of assessee's sister concerns. Return of income was filed for Asst. Year 2002-03 on 30/10/2002 declaring an income of Rs. 49,61,407/- along with audit report u/s 44AB of the Act. The return was processed u/s 143(1) on 11/02/2003. Thereafter on 8/9/2003 the assessee revised the return of income showing total income at Rs.NIL after setting off of unabsorbed depreciation of Rs. 49,61,407/-. The case was selected for scrutiny assessment and notices u/s 143(2) & 142(1) of the Act were issued alongwith questionnaire and served upon the assessee. Various details as required by Assessing....
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....d goods costing Rs. 8,05,578/- (being brought forward from previous year) and sold at Rs. 4,42,831. However, ld. AO was not satisfied with the submissions of assessee and was of the view that sales have been suppressed and accordingly made addition of Rs. 3,26,747/- which was thereafter restricted by ld. CIT(A) to Rs. 3,50,000/-. From the financial records of the assessee we observe that assessee is a limited company and is regularly filing its return and accounts are audited under the Companies Act, 1956 as well as under Income-tax Act, u/s 44AB. Assessee's gross turnover for the year under appeal was approximately 10.31 crores and profit before tax shown at Rs. 48.94 lacs. From perusal of the audited profit and loss account we find that during financial year 2000-01 sale of goods shown by assessee was Rs. 30,02,465/- and sale of goods during the year under appeal in F.Y. 2001-02 at Rs. 4,42,831/-. This sale of Rs. 4,42,831/- is the only sale shown by the assessee which has arisen out of sale of old stock of Rs. 8,05,578/-. However, total turnover of the assessee has increased from Rs. 9.66 crores in the year 2000-01 to Rs. 10.31 crores for F.Y.2001-02 which includes other income ....
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.... assessee only because it is to be assessed under different head the interest paid for the money borrowed for the purpose of business can only be considered u/s 36(1)(iii) of the Act irrespective of the fact that income from the dividend can only be assessed as other source at the mandate of the Act. We therefore, confirm the order of the ld. CIT(A) on the above basis." 11. Above decision was applied by the co-ordinate bench in assessee's own case in ITA No.1129/Ahd/1994 for Asst. Year 1990- 91 and 1214/Ahd/1995 for Asst. Year 1991-92 and addition on account of disallowance of interest was deleted. Ld. AR further submitted that no satisfaction was recorded by the Assessing Officer by way of proving that interest bearing funds in previous years have been utilized for the purpose of investments in shares. 12. The ld. DR along with relying on the order of ld. CIT(A) also referred to the decision of Hon. Calcutta High Court in the case of Dhanuka & Sons vs. CIT(Central)-1, [2011] 12 taxmann.com 227 (Cal) wherein it was observed that it was for the assessee to show by the production of documentary evidence that no interest bearing funds were used for acquiring equity shares. It wa....
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....funds) - Assessment year 2006-07 - For relevant year, assessee filed its return declaring exempt income being interest on bonds, exempted under section 10(15) and dividend income exempt under section 10(23D) - Assessing Officer having invoked provisions of section 14A. disallowed one per cent of interest expenses incurred for earning exempt income -Tribunal deleted said disallowance - Whether in view of fact that assessee had sufficient funds for making investments and it had not used borrowed funds for such purpose, impugned order passed by Tribunal deleting disallowance was to be upheld - Held, yes [Para 7] [In favour of assessee] FACTS * For the relevant assessment year, the assessee filed its return showing exempt income being fax free imerest on bonds, exempted under section I Of I5j and dividend exempt under section IO(23Di. The total sum worked out to Ks, J4 crorcs. * The Assessing Officer having invoked the provisions of section 14A. disallowed one percent of interest expenses incurred for earning exempt income, * In appellate proceedings, the Tribunal deleted the disallowance made by the Assessing Officer. * On revenue's appeal: ....