TaxTMI 
TaxTMI 
2017 (2) TMI 173
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....f assessee is against the order of CIT(A) confirming the disallowance of proportionate interest of Rs. 17,06,326/- out of interest bearing advances and loans. For this assessee has raised following ground No.1: - "1. The learned Commissioner of Income-Tax (Appeals) erred in confirming the disallowance of proportionate interest of Rs. 17,06,326/- u/s 36(1)(iii) ignoring the "statement of interest free Fund against interest free Loans & Advances." 3. Brief facts leading to the above issue are that, during the course of assessment proceedings the AO noticed from the accounts of the assessee i.e. the Profit and Loss A/c and balance sheet that the assessee debited interest on unsecured loan amount to the extent of Rs. 12,52,466/-, bank intere....
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....ncy cannot be accepted in the light of the fact that both the concerns are separate entities and the AO's finding that interest bearing funds have been siphoned off to make interest free advances to sister concerns and firms and Individuals has not been controverted , at the assessment or appellate stage. During the course of appellate proceedings also the appellant has not furnished cash flow' statement to show that interest free loan available to the extent of Rs. 2,30,70,739, has been transferred for interest free loans and advances. I, therefore, do not find any merit in the submission of the appellant and in the light of these facts, hold that the case laws discussed by the AO. fully apply to the facts of the appellant's ca....
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.... of the Act. For this assessee has raised following round No.2: - "2. The Learned CIT(A) erred in confirming the additions of Rs. 2,58,041/- u/s 41(1) ignoring that the appellant recognized it as creditors and liability not ceased to exist." 6. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the assessment order that there are Sundry Creditors outstanding in the balance sheet amounting to Rs. 3,73,13,000/-. On further perusal of list of Creditors, AO noticed that there were outstanding balances in the case of following creditors: - " Name of Creditors Amount Outstanding As on 31.03.2010 Dr. balance as advance Remark as on 31.03.2010 1. Emco Shipping Co. 50,220/- Nil Current ba....
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....unal. 7. Now before us, the learned Counsel for the assessee first of all argued that these amounts were outstanding as on the data in his name of Jupiter Shipping Agency and moreover these payments are cleared on 10-12-2010 vide cheque No.549288 issued towards previous year opening amount adjusted against advance payment by Jupiter Shipping Agency. To prove his point, he filed copy of account and payment made by cheque and argued that once the assessee admitted this liability and paid in the subsequent year, this liability cannot be said to have not in existence and ceased to exist. Accordingly, we are of the view that AO has wrongly invoked the provision of section 41(1) of the Act and hence we delete the addition. This issue of assessee....