TaxTMI 
TaxTMI 
2016 (1) TMI 1125
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....,541/- on account of disallowance of 'Finance & Interest Charges' without considering that if the assessee had interest-free funds which was advanced as interestfree deposit to its sister concern and then the assessee borrows interest-bearing funds to meet its business needs; it only means that the diverted fund has been supplemented by the interest-bearing funds. (ii) erred in deleting the aforesaid addition without appreciating the fact that the assessee company was incorporated in October, 1994, raised share capital & other funds and more than 98% of the fund so raised was given to the sister-concern in March,1995, itself. No prudent business entity would strip itself off the entire fund it has. Clearly, the advancing of deposit....
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....sessee is in appeal. The assessee company had given a deposit of Rs. 610 lacs in 1995 to M/s Kehems Consultants Private Limited in pursuance of License Agreement to acquire technology and the relevant technical know-how. The copy of the agreement and the related details were filed before the AO. by the assessee vide reply dated 25th March 2013. The assessee has further informed vide its reply dated 28th March that the assessee company had given a deposit of Rs. 610 lacs in 1995 to M/s Kehems Consultants Private Limited in pursuance of License Agreement to acquire technology and the relevant technical know-how. The copy of the agreement and the related details were also filed with the reply dated 25th March 2013. The deposit was given in the....
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....ll be evident that the interest free funds available with the company are far in excess of the interest free loan given by the company. This is without prejudice to the contention that as the deposit is given in the year 1995, this comparison itself is not warranted. 5. During the course of assessment proceedings, the AO observed from the Schedule-8 of the Balance Sheet relating to Loans, Advances and Deposits, the assessee company has shown advances at Rs. 5,09,61,406.31 narrating as 'deposit with Government Department and Others". The assessee was asked to submit the details of these advances and amount of interest recovered. In response the assessee submitted the list of advances/deposits. The AO found that the assessee had also made ....
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..... The AO further relied on the Hon'ble ITAT, Delhi, in case of ACIT vs. Punjab Stainless Steel Industries reported in 128 ITR 12. In this case, the assessee claimed that it gave interest -free advances from it's own funds and then borrowed funds from banks can be treated as for supplementing cash diverted by assessee without any benefit to it-claim for deduction of interest on borrowing disallowed by AO and confirmed by the ITAT. The AO disallowed the finance and interest charges charged in the profit and loss account at Rs. 39,91,541/- and added to the income of the assessee. 6. The matter carried to the ld. CIT(A) and the ld. CIT(A) deleted the addition. 7. The Ld. DR relied upon the order of AO. 8. The ld. Authorized Representat....
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....the ITAT. It is well settle principle that in the event of two conflicting decision of High Court, the decision which is in favor of the assessee should be followed - CIT Vs. Vegetable ACIT,3(1), Indore. vs. M/s. Kehems Engineering Private Limited, Indore. Products Ltd. [1973] 88 ITR 192 SC. In the present case the Id. AO has followed the decision of ITAT in contrast to a decision of the High Court. The decision rendered in the case of ACIT vs. Punjab Stainless Steel Industries reported in 128 ITR 12 is based on facts completely different form the instant case and is therefore not applicable in the assessee's case. The addition made by the Id. AO is not sustainable on the facts and in law and therefore the addition made be deleted. 9. We....
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.... ld. CIT(A) has deleted the disallowance made by the Assessing Officer observing as under :- "6. Ground no. 2 is against a lump sum disallowance of Rs. 2 lakh from certain expenses which are not properly vouched. This is an ad hoc disallowance, where AO has not even identified as to which expenses is questionable and unvouched. Out of all the expenses debited in the profit and loss account, he has made ad hoc disallowance of Rs. 2 lakh. Such ad hoc disallowances without identification of expense which is not properly vouched and without finding any defect in any vouchers is not at all justified when appellant is a company whose books of account are duly audited. Ground no.2 of appeal is also allowed. " 13. The Ld. DR relied upon....