2019 (2) TMI 1434

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....the funds taken on higher rate of interest have been given to sister concerns at lower rate of interest. 2. That under the facts and circumstances, Ld. CIT(A) erred in law as well as on merits in enhancing the disallowance of interest by Rs. 6,55,502/- thereby making the total disallowance of interest by Rs. 6,55,502/- thereby making the total disallowance of interest at Rs. 26,22,008/-, thus in disallowing the 100% of the interest expenses claimed. 2.1 That without prejudice to ground no. 2, Ld. CIT(A) exceeded his jurisdiction in enhancing the disallowance of interest by Rs. 6,55,502/-. 3. That without prejudice, even on the basis of findings of AO, the calculations of disallowable amount of Rs. 19,66,506/- is erroneous and excessiv....

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....he total income of the assessee and assessed the income of the assessee at Rs. 44,32,916/- vide order dated 23.12.2016 passed u/s. 143(3) of the Act. Against the assessment order dated 23.12.2016, assessee appealed before the ld. CIT(A), who vide his impugned order dated 2.2.2018 has dismissed the appeal of the assessee by enhancement of income of Rs. 6,55,502/-. Aggrieved with the impugned order the assessee is in appeal before the Tribunal. 3. Ld. A.R. for the Assessee has stated that the lower authorities erred in law and on merits in disallowing the interest expenses of Rs. 19,66,506/- out of total interest expenses claimed at Rs. 26,22,008/- on the ground that the funds taken on higher rate of interest have been given to sister conce....

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....:- - CIT vs. SA Builders 288 ITR 1 (SC). - CIT vs. Tin Box Co. 260 ITR 537 (Del.) 4. On the contrary, Ld. DR heavily supported the order of the Ld. CIT(A) which does not need any interference. He stated that on perusal of P&L account of the assessee, AO noted that assessee has claimed interest expenses on others under the head of 'Financial Coast' of Rs. 26,22,008/-. Vide note sheet entry dated 3.8.2016 assessee was show caused that why interest on funds borrowed have been diverted @3% whereas assessee is paying interest at above 9% to its related partners. Assessee vide its letter dated 17.8.2016 has submitted the reply. After considering the reply of the assessee, the AO observed that assessee has borrowed funds @12% per annum and cl....

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....la Agrotech (P) Ltd. reached to Rs. 21,85,61,355/- at the end of the year. However, correctly it was only Rs. 50,36,252/-. It is also noted that Ld. CIT (A) wrongly adopted the total of credit side being Rs. 21,85,61,355/- as the figure of closing balance. However, Ld. CIT(A) also incorrectly stated the reserves and capital available is Rs. 2 Crore approx against correctly the capital and reserves at Rs. 4.25 Crore. M/s. Murliwala Agrotech (P) Ltd. (Murliwala) is a sister concern of assessee. Advances given by assessee to Murliwala since that concern needs funds for the purpose of business. Hence, advance given by assessee to Murliwala is due to commercial expediency. After perusing the Paper Book viz. the Audited balance sheet for AY 2014....