TaxTMI 
TaxTMI 
2012 (2) TMI 558
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.... 7,12,323/- made on account of capitalization of interest on capital work in process in view of the provisions of Section 36(1)(iii) and explanation 8 to Section 43(1) of theia,1961. 4. That the ld. CIT(A) has erred in law and f acts in deleting the addition of Rs. 72,219/- made on account of disallowance of interest u/s 36 ( 1 ) (iii ) of the Income - tax Act , 1961 . 5. That the order of the ld . CIT ( A ) beset aside and that of the AO be restored. 6. That the appellant craves leave to add of amend any ground of appeal before it is finally disposed off ." 3. In Ground No.1, revenue contended that the CIT(A) erred in law and on facts in deleting addition of Rs. 64 lacs, made u/s 69 of the Act. 4. The brief facts of the case are that during the course of survey conducted on 22.2.2006 u/s 133A of the Act, at business premises, of the assessee. At the time of ingress into the office of Shri Gurlal Singh Grewal, by the survey team, the Joint Managing Director of the company, tore a piece of paper marked 'Sigma'. This document was impounded, on which certain names, amounts and dates were written. As per AO, this document revealed that the assessee had advanced loans t....
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....not to Shri Gurlal Singh Grewal from whose possession it was found . In concluding that the said document belonged to the appellant, there must have been so me statement of Shri Gurlal Singh Grewal specifically and categorically admitting and explaining that the document to containing these entries pertained to the appellant only . Admittedly , such statement is not there in this case. Further, as brought out in the written submissions of the ld. Counsel, the appellant had already stated bef ore the Hon'ble Co mp any Law Board that Shri G urlal Singh Grewal has been misusing the premises of the company by conducting dealings of his personal business while sitting in the premises of M/s Upper India Steel Mfg . and Engg . Co . Ltd . Shri Gurlal Singh Grewal is further shown to be carrying on his independent business of running restaurants. During the course of survey at the factory premises of the appellant, certain papers with regard to certain amounts spent by him on the construction of ne w house are also shown to have been found and on the basis of these notings, he had offered a sum of Rs. 4.5 lac in his return for the assessment year 2006-07. I therefore , agree with the l....
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....nt, the addition made in the hands of the appellant on the basis of entries in the impugned document , cannot be said to be justified." 4. The ld . CIT ( A ) is also of the opinion that the paper having transactions were 64 lacs is to be assessed in the hand of the director and not in the hand of company. 5.1.6 Hence, Rs. 64 lacs as contained in the paper found in the room of Shri Gurlal Singh Grewal Director M/s Upper India Steel Manufacturing & Engg . Co . Ltd . is hereby added back to the income of the assessee on account of unexplained investment in loans u/s 69 of the IT Act,1961. Penalty proceedings u/s 271(1)(c) are hereby initiated separately f or concealing the particulars of income and f urnishing inaccurate particulars of its income." 7. Ld. 'AR' vehemently contended that in view of the scheme of income tax, no income can be taxed twice, as has been done by the revenue. Firstly, taxing the same income of Rs. 64 lacs in the hands of the company, the present appellant assessee as also in the hand of Shri Gurlal Singh Grewal. We fully agree with the contention raised by the assessee in the matter of taxing single item of income tax twice, is not tenable under ....
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....rt in the case of CIT V Vardhman Polytex Ltd. for the assessment year 1992-93 in ITA No. 1 of 2003. As per AO, in the case of Oswal Spinning Mills, the Hon'ble Punjab & Haryana High Court held that interest paid on acquisition of machinery, can be treated as part of the cost of machinery. Ld. CIT(A) deleted the impugned addition made by the AO. The ld. CIT(A), on the basis of submission filed before him, held that the appellant had not raised any loan from any bank or any financial institution against installation of machinery during the year under consideration. This contention was also raised before the AO. The AO failed to give specific finding on this aspect and, hence, ld. CI T(A) held that it cannot be presumed that any interest bearing funds, have been invested, in the capital work, in process, shown by the assessee. Ld. CIT(A), found the cases relied upon by the AO as distinguishable, factually and materially. We do not find any infirmity in the findings of the ld. CIT(A) and, hence, findings of the ld. CIT(A) are upheld and ground of appeal raised by the revenue is dismissed. 10. In Ground No.4, revenue contended that the CIT(A) erred in law and on facts in deleting t....
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....n view of the provisions of Section 36(1)(iii) and explan ation 8 to Section 43(1) of the Income - tax Act , 1961 . 3. That the ld. CIT(A) has erred in law and on f acts in deleting the addition of Rs. 16,510/- made on account of disallowance of interest u/s 36(1) (iii ) of the Income - tax Act , 1961 on advances to sister concern i.e. M/s Upper India Special Casting Ltd . with whom no transaction had taken place during the year and ignoring the decision of Hon'ble Punjab & Haryana High Court in the case of CIT V Abhishek Industries Ltd. in ITA No.110 of 2005. 4. That the order of the ld .C IT ( A ) beset aside and that of the AO be restored. 5. That the appellant craves leave to add or amend any ground of appeal before it is f inally disposed off." 16. In Ground No.1, revenue contended that CIT(A) erred in law in deleting addition of Rs. 7,68,000/- made by AO on account of unaccounted interest income. The findings of the ld. CIT(A) are recorded in para 3.2 of the order dated 20.08.2010 for the assessment year 2007-08, relevant part of the same are reproduced hereunder : "3.2 I have considered the submissions of the AR. First addition of Rs. 7,68,000/- has been made on....