TaxTMI 
TaxTMI 
2016 (8) TMI 1217
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....pplication filed by the assessee, it was recalled vide order dated 29.4.2016. In pursuance to the same, the present appeal was heard by the Bench. 3. We find that the present appeal was filed late by 26 days. An application for condonation of delay was filed before us stating the reason for the delay being the closure of the unit and declaration of the bank account of the assessee as NPA, which matter was being pursued before the DRI, Chandigarh. The learned D.R. opposed the application filed. We find that the assessee had adduced reasonable cause for delay and moreover since the delay is only of 26 days, we condone the same and proceed to adjudicate the appeal. 4. The assessee has raised the following grounds : "1. That the worthy Comm....
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.... Appellant pertaining to earlier years, which were out of the capital of M/s Titan Comfine Ltd. and the Ld. Assessing Officer and worthy Commissioner of Income Tax(Appeals)-II, Ludhiana has not come out with any justification or documentary evidence that the loans & advances / debtor were given out of the pooled funds or out of borrowed funds. 6. That the Ld. Assessing Officer as well as worthy Commissioner of Income Tax (Appeals) -II, Ludhiana ignored the Judgment of various Courts & the Hon'ble Income Tax Appellant Tribunal, Chandigarh directly applicable to the Company, but wrongly applied the Judgment of the Jurisdictional High Court in the case of M/s Abhishek Industries Ltd, which is not applicable in the Appellant's case. 7....
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....aspect of an Agreement under the Contract Act, 1872 and also its validity. 10. That the Ld. Commissioner of Income Tax (Appeals) -II, Ludhiana has not given any opportunity / directed to place on record, the copy of any Agreement, which though otherwise was also not within his jurisdiction, once the amount of loans & advances accepted & approved by Hon'ble Punjab & Haryana High Court and admitting the said amount has been given much prior to the FY under consideration. 11. That the charging of Interest and levying of penalty is totally unjustified & legally untenable and not consequential in nature." 5. The sole grievance of the assessee in the present appeal is against the action of the learned CIT (Appeals) in upholding the di....
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....ustrial unit and for its working capital requirements. No amount was diverted from the loan accounts after the merger of Titan Comfine Ltd. with the assessee's company for advancing any amount to these finance companies. Hence, there is no nexus between the loans obtained from the bank and the sundry debtors outstanding in the name of the Finance Companies and, therefore, no disallowance of interest to be made. The Assessing Officer was not satisfied with the assessee's contention. The Assessing Officer observed that it was evident that these interest free advances were given without any commercial expediency. The Assessing Officer further observed that even though these advances were made before the merger, neither any recovery nor any eff....
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....interest free funds to make the advances and in the absence of any direct nexus established with the interest bearing funds, the presumption was that the same was made out of interest free funds only. Reliance was placed on a number of decisions of the Jurisdictional High Court and the I.T.A.T. in support of this proposition. The learned counsel for the assessee pointed out that the decision in the case of Abhishek Industries Ltd. (supra) had been overruled by subsequent decision of the Jurisdictional High Court in the case of Bright Enterprises Pvt. Ltd. Vs. CIT, 381 ITR 107 (P&H) and the decision of the Hon'ble Apex Court in the case of Hero Cycles (P) Ltd. Vs. CIT, 379 ITR 347 (SC). The learned counsel for the assessee also stated th....
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....s it is and it cannot be said post merger that interest bearing funds of the assessee i.e M/s Jagannath Alloys Ltd., were used for the purpose of making the advance. The interest bearing funds of the assessee taken pre or post merger with Titan Comfine Ltd., have no nexus at all with the advances which were undisputedly made by Titan Comfine Ltd. 13. Further we find that during the course of assessment proceedings the assessee had made detailed submissions to this effect that the outstanding balances of debtors/loans & advances in the name of Finance companies was a result of amalgamation/merger/arrangement as per the provisions of section 391-394 of the Companies Act,1956 duly sanctioned by the Punjab & Haryana High Court vide order dated....