TaxTMI 
TaxTMI 
2017 (11) TMI 1419
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.... of interest paid of Rs. 2,14,640/ - being difference of bank interest of Rs. 6,31,235/ - paid to Bharat Co - Op. Bank and interest received from sister concern of Rs. 4,16,595/- without appreciating that the fund were advanced out of own funds, further the total funds were advanced in earlier financial years and not during the years, therefore disallowance made was not sustainable. 2. The learned CIT(A) erred in confirming the action of the A.O. for determining the rate of interest @ 24% instead of rate @ 18 % has been paid by the assessee to the Bharat Co-Op Bank. Hence, the observation of A.O confirmed by the CIT(A) was not correct. II. License fee of Rs. 22,96,200/- 3. The learned CIT(A) erred in confirming the disallowance of license fees of Rs. 22,96,200/ - by misinterpreting the letter dated 30-1- 2013, without considering the submission of assessee. 4. The learned CIT(A) erred in disallowing the amount of Rs. 22,96,200/ - as a licence fees u/s. 43B without considering the submissions, evidence and correspondence done by the assessee with the excise department for PLL License & RS II License. III. Addition u/s. 41(1) of the Act Rs. 1,20,25,559/-. 5. The lea....
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....as observed by the A.O that the assessee has paid bank interest of Rs. 6,31,235/- to Bharat Co-operative Bank Limited . It was observed by the AO from the Balance Sheet of the assessee , that the assessee has taken secured loan from Bharat Cooperative Bank Ltd. of Rs. 26,41,687/- on which interest has been paid of Rs. 6,31,234/- . It was observed by the AO that the opening and closing balance of the said loan was stagnant at Rs. 26,41,687/- . It was observed by the AO that the assessee has advanced loans and advances amounting to Rs. 1,75,66,151/- , out of which the assessee has charged interest from two parties as under:- (In Rs.) Name Op. Amt. Addition Reduction Balance Rate of Interest Alfa Consumer Products Pvt. Ltd. 3,92,916 16,678 1,50,000 2,59,595 6% Alfa Sai Minerals Pvt. Ltd. 68,26,696 3,23,245 13,95,450 57,54,491 6% Thus it was observed by the A.O. that the assessee has obtained secured loan of Rs. 26,41,687/- on which the assessee has paid interest @ 24% and the assessee has given loans of Rs. 60,14,086/- on which interest at the rate of 6% was earned . The AO observed that it is not acceptable as in the opinion of the A.O. that borrowing was at....
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....tanding, for which the PLL Licence was renewed. They have not stated the amount of Licence fees payable as on 31.03.2010 for renewal of licence along with interest. The record maintained by them pertains to any short payment towards application for renewal of licence. It is pertinent to note that if the assessee goes for renewal of licence today, then he is liable to pay licence fees for each year for which he has not deposited the same. Licence fees accounted in the books for each year is as per the state excise department's circular. We attach herewith statement and copies of the circulars for each year from F.Y.2003-04, for which the licence fees has to be deposited as on 31.03.2010. As a confirmation of the liability we are enclosing the copies of state government circular stating PLL Licence fees payable for same period. The same amount have been provided in the books and are reflected under the head current liability. The amount debited to Profit and Loss account is Rs. 22,96,200/- under the head Licence fees, for which find attached extract of ledger from books. It includes Rs. 22,14,300 towards PLL Licence fee as explained above and balance towards other Licenc....
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.... P&L Account based on circulars issued by State Government, from year to year. The assessee submitted copies of circular and statement for each year from financial year 2003-04 onwards . The correspondence with the State Excise Department was enclosed. The assessee submitted that the claim of the license fee for current year is Rs. 22,96,200/- and the total amount payable as at year end was Rs. 1,25,91,600/- as confirmed by the inspector of State Excise which was on account of PLL and RS II licence fee . It was submitted that Superintendent, State Excise has confirmed liability of Rs. 5,66,041/- as on date and it was submitted that this amount pertained to financial year 2002-03 which was paid in 2005-06. Thus it was submitted that these liabilities are payable and no disallowance can be made . It was also submitted that the assessee is carrying out manufacturing of IMFL(Indian made Foreign Liquor) from the year 1975 . It was submitted that the assessee has license for manufacturing of liquor dated 24-12-1975 and to keep the licence active, licence fee is paid to the State Government. The latest correspondence from the State Excise Department dated 12-12-2013 was enclosed which sho....
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....wance of interest on loans on differential between interest paid on bank loans and interest on loans earned being given to sister concerns at lower rate of interest. Further our attention was drawn to page 216 to 217 wherein the accounts of Alfa Consumer Products P. Ltd and also Alfa Sai Minerals P. Ltd. are placed for the period 1st April, 2000 to 31st March, 2010 . Our attention was also drawn to page no. 215 of the paper book wherein the certificate from Bharat Cooperative Bank(Mumbai) Ltd. dated 31-07-2000 is placed wherein it is specified that they have sanctioned loan of Rs. 24,84,216/- to the assessee on 16th July, 1996 and interest of Rs. 6,31,234.80 was received by them from the assessee and rent of Rs. 7,45,264.80 was paid by them to the assessee for the period from 01.04.2009 to 31.03.2010. These documents placed in paper book at page 215-217 are additional evidences filed before the tribunal for the first time and it is claimed that documents are part of the books of accounts. Our attention was also drawn to page no. 131 and 132 wherein the Balance sheet of the assessee as at 31st March, 2004 is placed and it was submitted loans were advanced in the earlier years. It wa....
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....nts were disallowed on yearly basis in the year of making provision for license fee , while again it is now disallowed by invoking provisions of Section 41(1). Our attention was drawn to page no. 219 and it is submitted that the licence fees is disallowed on year to year basis for which a chart is prepared by the assessee for assessment year 2006-07 to 2013-14. Our attention was also drawn to page no. 96-97/paper book wherein the decision of Hon'ble Bombay High court dated 12.10.2001 is placed wherein the execution , implementation and operation of the order of the State Excise order bearing no. MPL-5290/1745/EXC-3 dated 26.09.2001 by Hon'ble Bombay High Court is placed. On direction of the Bench, the assessee has supplied copy of the said order dated 26-09-2011 passed by the State. The assessee has also filed written submissions before the tribunal. Ld. DR on the other hand drew our attention to order of learned CIT(A)/ page no. 16 /para 5.5 , wherein it is mentioned that enquiries were made by the AO to come to the conclusion that no license fee is payable by the assessee to the State Government . Our attention was also drawn by learned DR to page no 103-106 /paper book wherein ....
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....essive rate of inteerst as compared to interest charged on loans to the sister concerns which were at a lower rate , which in the opinion of the AO no prudent businessmen will do , which led to the disallowance of Rs. 2,14,640/- which was added to the income of the assessee by the AO , vide assessment order dated 14-03-2013 passed by the AO u/s 143(3) . The addition so made by the AO was later confirmed by learned CIT(A). It is the contention of the assessee that it has borrowed Rs. 26,41,687/- from Bharat Cooperative Bank in the year 1996 . It is the claim of the assessee that the said amount was borrowed with clear intention of acquiring shops which was leased to the lending bank itself and it is claimed that none of the borrowed funds were utilised for the purpose of advancing money to sister concerns. And second bone of contention of assessee is that its own funds and also other interest free funds available with it are more than the loan amount advanced to sister concern. The assessee has relied upon the decision of Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra) , Reliance Utilities and Power Ltd. (supra) and Reliance Communications Infrastructure Ltd.(supra).....
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....to shift unit from District Raigarh to District Aurangabad . Some dispute arose between the parties and the State Government through Hon'ble Minister(State Excise) vide order no. MPL-5290/1745/Exc-3 dated 26-09-2001 was pleased to transfer back the license in favour of original licensee namely Mr Anant Parshuram Shetye. The assessee challenged this order by filing writ petition with Hon'ble Bombay High Court under Article 226 of the Constitution of India , bearing w.p. no. 4878 of 2001 and vide orders dated 12-10-2001, Hon'ble Bombay High Court was pleased to stay the execution , implementation and operation of the order passed by Hon'ble Minister (State Excise) dated 26-09-2001 till 05-11-2001. The Hon'ble Bombay High Court vide orders dated 11-06-2002 was pleased to allow ad-interim orders already made to continue till further orders. The State of Maharashtra filed an application under the said writ petition wherein Hon'ble Bombay High Court vide orders dated 16-10-2002 was pleased to direct the assessee, Sh. Anant Parshuram Shetye and/or Captain Parmod Salvi(Respondents) to deposit license fee with State of Maharashtra within 3 months from the date of order failing which the afo....