TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1437
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....f Rs. 2,20,164/- u/s 36(1 )(iii) and further erred in enhancing the disallowance under the said section to the extent of Rs. 4,19,436/- is bad in law and against the facts and circumstances of the case." 3. Facts of the case, in brief, are that the assessee is an individual and derives income from house property, business, capital gain and other sources. The business is carried on through a proprietorship concern, M/s Superior Fabrics wherein she is engaged in defence supplies and tender business. She filed her return of income on 30th July, 2011 declaring the total income of Rs. 1,05,17,045/-. The Assessing Officer, during the course of assessment proceedings noticed from the Profit & Loss Account that the assessee has claimed interest expenses amounting to Rs. 12,53,670/-. From the various details furnished by the assessee, he observed that interest from PNB overdraft account amounts to Rs. 12,34,213/-. From the balance sheet, he noticed that the assessee has made investment for industrial plot at Greater Noida. On being asked by the Assessing Officer to explain the source of the investment, it was submitted that the source of funding for the investment was from the PNB Overdraf....
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....e contentions of the appellant that the sale proceeds would have been materially used for acquisition of the plot falls to the ground. 5.1.11 In that view of the matter, the contention of the AO that when the property has not been put to use and interest bearing fund has been used for acquisition of the plot, the proviso to section 36 (i)(iii) would apply squarely, calling for suitable disallowance in this regard. In fact the disallowance of interest on the average debit balance being higher than the total purchase consideration for the plot i.e. Rs. 53,29,620/-, would call for disallowance at the rate of 12% (the rate has not been disputed by the appellant) i.e. Rs. 6,39,600/-. The same would be directed to be disallowed in place of Rs. 2,20,164/- made by the Assessing Officer." 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 6. The ld. counsel for the assessee, made two-fold arguments challenging the addition made by the Assessing Officer and enhanced by the CIT(A). Referring to page 89 to 156 of the paper book which contains the assessment order for earlier years, the ld. counsel submitted that in the past, no disallowances were m....
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....izing the nature of an account maintained by the assessee so that the basis of a concluded assessment is not ignored without actually reopening the assessment." 9. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. DD Industries Ltd. (2015) 117 DTR 355 (Del), he submitted that the Hon'ble High Court in the said decision has held that when the assessee is possessed of mixed funds which include its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn. In earlier years also an amount was advanced from out of surplus funds for purchase of showroom and no borrowed funds were utilized for these advances and no disallowance of interest paid was made during those years in orders made under 143(3) and since, in the instant assessment year, facts were identical, no disallowance could be made. It was held that disallowance under section 36(1)(iii) cannot be extended to advances given in the assessment year which are opening balance during the year. Accordingly, the disallowance made under section 36(1)(iii) by the Assessing Officer was held to be not proper and the order of the Tribunal was uphe....
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.... of enhancement was given, she submitted that the records of the CIT(A) has to be called for. Further, the assessee has not established the commercial expediency. She accordingly submitted that the order of the CIT(A) be upheld and the grounds be dismissed. 14. We have considered the rival arguments and perused the orders of the Assessing Officer and CIT(A). We have also considered the various decisions cited before us. We find the Assessing Officer, invoking the provisions of section 36(1)(iii) made disallowance of Rs. 2,20,164/- on the ground that the assessee has diverted its interest bearing funds for purchase of an industrial plot at Greater Noida which has not been put to use for business. We find the ld.CIT(A) enhanced the disallowance to Rs. 6,39,600/-the reasons for which has already been reproduced in the preceding paragraphs. It is the submission of the ld counsel for the assessee that neither in the past nor in the subsequent assessment years disallowance is made u/s 36(1)(iii). Further, the own capital funds of the assessee is far more than the investment made in the industrial plot and the income of the assessee during the impugned assessment year is more than 1.06....
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.... Rs. 34,50,000/- on account of loan received u/s 68 is bad in law and against the facts and circumstances of the case." 17. Facts of the case, in brief, are that the Assessing Officer, during the course of assessment proceedings, observed from the balance sheet that the assessee had shown advances received amounting to Rs. 2,25,08,885/- during the year. From the various details furnished by the assessee to discharge the onus cast u/s 68 of the IT Act, the Assessing Officer noted that the assessee could not substantiate the credit worthiness of the following parties with the following remarks:- Name of Party Net Advance Received Remarks 1. Mahesh Finsec Pvt. Ltd. Rs. 5,00,000 The assessee failed to furnish the PAN/ITR/Audited financial statements. 2. Indian Probuild Pvt. Ltd. Rs. 29,50,000 The co.'s ITRs filed for A.Y. 11-12 and 10-11 reveals loss returns of Rs.(-) 76982 & Rs.(-)18,05,827. Further, the reserves and surplus account show capital reserve of Rs. 1453532 for both the years. 18. Invoking the provisions of section 68 and observing that the assessee failed to discharge the onus of establishing the identity and credit worthiness of the parties and genuineness ....
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....he balance sheet as on 31st March, 2011 wherein the share capital & reserves and surplus of the said company had been shown at Rs. 53.78 crores. He submitted that name of the company has since been changed to RPL Capital Finance Ltd., after amalgamation as approved by the Hon'ble High Court. Relying on various decisions, the ld. counsel for the assessee submitted that when the assessee discharged the onus cast on it by furnishing the various details to substantiate the identity and credit worthiness of the loan creditors and genuineness of the transaction, no addition u/s 68 is called for. So far as the various decisions relied on by the ld.CIT(A) as well as the ld. DR are concerned, he submitted that those decisions are not applicable to the facts of the present case since it is not a case of bogus capital. Referring to various pages of the paper book, he submitted that although full details are given before both the lower authorities, they have closed their eyes and proceeded in an arbitrary manner just to bring to tax an amount of Rs. 34,50,000/- by some way or the other. 22. The ld. DR, on the other hand, heavily relied on the order of the Assessing Officer and CIT(A). She....
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....013, 28.01.2014 and 03.02.2014." 25. From the copy of the ledger account of the said party in the books of account of the assessee, we find, apart from the amount of Rs. 29,50,000/- received as advance from India Probuild Pvt. Ltd., the assessee has also received another advance of Rs. 1 crore from the said party on 18th May, 2011 and the assessee started repaying the amount of Rs. 1,29,50,000/- between February 2012 to July, 2014 the details of which are as under:- 15th February, 2012 - Rs. 25 lakhs 13th March, 2014 - Rs. 40 lakhs 28th March, 2014 - Rs. 36 lakhs 24th July, 2014 - Rs. 28,50,000/- 26. A perusal of the copy of the assessment order passed u/s 153A/143(3) on 29th December, 2016 shows that no addition u/s 68 of the Act has been made in the hands of the assessee on account of the amount of advance of Rs. 1 crore received from India Probuild Pvt. Ltd. during assessment year 2012-13. Thus, we find force in the argument of the ld. counsel for the assessee that when the Assessing Officer has not doubted the identity and credit worthiness of the party and genuineness of the said advance of Rs. 1 crore in the subsequent year, how can he disbelieve the amount of a....