TaxTMI 
TaxTMI 
2016 (9) TMI 914
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....appeal, which are common in both the appeals except the quantum of additions, which are as under from ITA No. 484/Hyd/2016: 1. The learned CIT (A) erred in facts and law while passing order. 2. The learned CIT(A) erred in disallowing the depreciation on SAF Plant of Rs. 8,93,31,644/- 3. The learned CIT(A) erred in disallowing proportionate interest of Rs. 18,53,245/- calculated at 14.5% on the deposit made with Sick PSU of Rs. 127.81Iakhs. 4. The learned CIT(A) erred in observing that the provision for non moving stores of Rs. 11,86,000/- do not constitute the ascertained liabilities and further erred in applying item (c) of sub section (2) of Sec 115JB of the I.T. Act. 5. For these & other groun....
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....e High Court in various cases. During the assessment proceedings, assessee submitted that the assets of SAF are ready to use is carefully considered by the AO. The AO observed that it is pertinent to note that the assets of SAF were not actually put to use from 1996-97. Even though huge time lapsed from the date of putting the assets to trial runs, assessee has not actually put the assets to use. During the A. Y. 2000-2001 also the assets of SAF were not put to actual, effective use, In view of the above legal position and the fact that the assets of SAF plant are not put to use during the relevant previous year, the depreciation claimed to the tune of Rs. 8,93,31,644/- was disallowed by the Assessing Officer and added to the total income. ....
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.... Rs. 18,53,245/-, AO observed that, no prudent businessman would pay interest on the loans borrowed by him, while his funds are lying elsewhere as interest free deposits. The first thing he does is to take back the interest free deposits and use them for his business purposes, rather than borrowing of interest bearing loan. Since the assessee has advanced interest-free intercorporate deposits, it had to pay interest on the loans borrowed to the extent of the inter-corporate deposits. This amounts to utilization of borrowed funds for non-business purposes. The interest paid by the assessee on the borrowed funds which were utilized for non-business purposes cannot be allowed u/s 36(1)(vii) of the Act. The Assessing Officer relied on the Keral....
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....erved that the fact that the deposits were made in the year 1992 with an agreement to receive interest thereon, prove the intention of the appellant that basically the deposits were made with an objective in view to earn interest thereon. It is understandable that when the possibility of recovery of the principal amount itself becomes doubtful on such a company becoming sick, likelihood of receiving interest on such deposits becomes even more difficult that too in the given circumstances of the assessee's case. When the assessee company has made a conscious policy decision not to provide for interest on the said deposits which fact has also been taken by disallowing a portion of interest liability of the assessee. CIT(A) held that thus the ....
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.... the AY. 2001-02 and 2003-04 in the respective orders of the CIT (A) -IV under section 143(3) dated 28/04/2006 whereby he allowed assesses claim stating that, "When the appellant company has made a conscious policy decision not to provide for interest on the said deposits which fact has also been taken into consideration by Comptroller and Auditor General, no adverse view can be taken by disallowing a portion of the interest liability of the appellant. In view of the above, therefore, the AO is not justified in disallowing interest payment. 16. Ld. DR, on the other hand, relied upon the order of the CIT(A). 17. Considered the submissions of the parties and perused the material facts on record as well as orders of revenue authorities. ....
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....,000/- do not constitute the ascertained liabilities and further erred in applying item (c) of sub-section (2) of section 115JB of the Act. He relied on the following cases: 1. DCIT Vs. Becton Dickinson India (P) Ltd.., ITA No. 904/Del.2010. 2. Bharat Heavy Electricals Ltd. Vs. DCIT [2005] 98 TTJ Delhi 565. 20. Ld. DR relied on the orders of revenue authorities. 21. Considered the submissions of both the parties and perused the material facts on records as well as the orders of revenue authorities. From submissions of ld. AR, the assessee had written off the value of non-moving stock as per the valuation policy of the company. This write off cannot be considered as unascertained liability for the purpose of sec....