TaxTMI 
TaxTMI 
2017 (1) TMI 932
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.... 2. The Ld. CIT(Appeals) has erred in so deleting the addition of Rs. 30,87,940/- without appreciating the fact that despite sufficient opportunities the assessee could not adduce any evidence before the Assessing Officer that the said stock was recorded in the assessee's books of account. 3. On the facts and circumstances sof the cae the Ld. CIT(Appels) has erred in deleing the addition of Rs. 3,02,400/- made by the Assessing Officer u/s 36(1)(iii) of the I.T. Act, 1961. 4. The Ld. CIT(Appeals) has erred in so deleting the addition of Rs. 3,02,400/- without there being any evidence that the interest free advances given by the assessee to Hanuman Tractor and two others were due to business expediency and merely because ....
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....e details of 1934 bags of red chilly of 40 kg each kept with it by the assessee. Meanwhile, the AO also issued a letter to the assessee enclosed with the copy of stock statement of 1934 bags of red chilly received from Best Cold Storage Pvt. Ltd., calling for the details of stock kept by the assessee with Best Cold Storage Pvt. Ltd. along with the purchase bills etc. In response thereto, the assessee filed his reply vide letter dtd. 24.10.2010 which is reproduced in para- 5.1 on pg.no.2 and 3 of the assessment order. The AO having not been satisfied with the explanation filed by the assessee issued another letter calling for details of stock kept with the said concern. The assessee filed another submission which is reproduced in para 5.2 of....
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....he same were earlier purchased from M/s Maheshwari Trading Company, Guntur. The CIT(Appeals) also observed that all the relevant submissions were before the Assessing Officer. The learned CIT(Appeals) further observed that AO has not taken any steps to verify the submissions of the assessee. Accordingly the learned CIT(Appeals) deleted the addition. In this regard I may gainfully refer to the following observations of the Learned CIT(Appeals): "7.2 It is not disputed that 1934 bags each of 40 kg of red chillies were lying in the Best Cold Storage. The appellant has admitted the ownership of the stock and contended that out of the 1834 bags 594 bags of chilly were put in the Best Cold Storage during the relevant financial year. The ....
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....t that the stock kept in cold storage was reflected in the opening stock, coupled with the fact that the stock as per books was more than the stock reflected in the stock statement supplied by Best Cold Storage, the AO is not justified to add the value of this stock u/s 69 carried substantial force. 7.3 The ld. AO in para-3 of the assessment order has recorded a finding hat "the books of account & other relevant documents have been audited as required under the provisions of section 44 of the I.T. Act." The ld. AO in para-4 of the assessment order has further recorded a finding that the assessee has produced all the details called for including the audited books of account during the assessment proceeding and the same were verified....
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.... that the stock of red chillies lying with Best Cold Storage was out of the opening stock of the assessee and cannot be said to be an unaccounted purchase. Hence I find that the above order of Learned CIT(Appeals) is cogent one and does not need any interference. I find that learned CIT(Appeals) has given the finding after elaborately examining the case records. I do not find any infirmity in the findings of the learned CIT(Appeals). 6. Accordingly I uphold the order of Learned CIT(Appeals) and this issue is decided in favour of the assessee and against the Revenue. 7. Apropos the second issue of deletion of addition of Rs. 3 02 400/-. Brief facts on this issue are as under : The AO in the course of assessment proceedings found ....
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....ort the business of the appellant and the interest free loan given to them for short term get compensated by the business with which they support appellant. The appellant in support of his claim has relied on the decision of Hon. Madras High Court in the case of CIT vs. Pudukottai Co. Pvt. Ltd. (1972) 84 ITR 788 (Mad.) wherein it has been held that once it is considered that loan borrowed are for the purposes of business then u/s 36(i)(iii) interest paid is an allowable expenditure. The AR has also relied on the decision of CIT vs. Indian Explosive Ltd. (1991) 192 ITR 144 (Cal.), CIT Vs. Coimbatore Salem Transport (P) Ltd. (1966) 619 ITR 480 (Mad.) wherein it has been held that without correlating the interest free loan to the borrowed capi....