TaxTMI 
TaxTMI 
2022 (3) TMI 36
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....f Rs. 14,54,731/- in respect of interest payment u/s. 36(1)(iii) The appellant submits that interest expenses were incurred wholly and exclusively for the purpose of business and no disallowance is justified. The disallowance being contrary to the facts and contrary to the provisions of law be deleted. 2.1 The appellant without prejudice to above further submits that disallowance in any event is excessively high and it be directed to be substantially reduced. It is submitted that it be so held now. 4. The contention of the Ld. counsel for the assessee before us was that identical issue stood adjudicated by the ITAT in the case of the assessee itself in assessment year 2010-11 in ITA No. 2276/Ahd/2015 vide order dated 21.02.2019 wherein the issue was restored back to the A.O. for deciding afresh. Copy of the order was placed before us. 5. Ld. D.R. fairly agreed with the above contention of the ld. Counsel for the assessee. 6. In the light of the above submissions made before us, we shall now proceed to adjudicate the issue. 7. The facts relating to the issue are that the disallowance of interest u/s. 36(1)(iii) of the Act was made by the A.O. on interest free lo....
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....- only. However as mentioned above in this order, the ld. counsel has submitted that the assesse was having total interest free funds aggregating to Rs. 4,41,33,783/- and pleaded that no disallowance u/s.36(i)(iii) is called for. In the light of aforesaid facts and circumstances, we observe that the Assessing officer and the ld. CIT (A) has not given categorical finding on the following issues. (i) Whether assessee had sufficient interest free funds to cover advances given to its associate concerns and no interest bearing fund was advanced to its associate concerns. (ii) Whether the money advanced to the sister concerns and others was for the purpose of business need of the assessee. The ld. counsel has submitted that such fact was categorically pointed out before the assessing officer and the same has not been denied by either of the lower authorities. During the course of appellate proceedings before us these contentions of the ld. counsel was not controverted by the Revenue Therefore, we are of the view that it would be appropriate to restore this issue to the file of the assessing officer to decide denovo on the points (i) and (ii) as above after affording adequate opportunity ....
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.... it is found that the assessee company is having interest free funds in the form of share capital and reserves and surplus to the extent of Rs. 84,11,519 only. The break up of which is given here under: Share capital Rs. 2,0833,880 Reserve and surplus Rs. 1,01,59,839 Total Rs. 3,09,93,719 13. He pointed out that this amount of Rs. 3,09,93,719/- was sufficient for making the interest free advances of Rs. 1,98,55,747/-. and in view of the settled proposition of law in the case of CIT vs. Reliance Industries Ltd.410 ITR 466(SC) that where sufficient own interest free funds were available, the presumption is that the said funds were used for making interest free advances calling for no disallowance of interest, the issue be adjudicated following the said proposition. 14. Considering the above submissions of the assessee regarding the proposition of law settled by the Hon'ble Supreme court vis a vis the presumption of utilization of own funds for making interest free business advances in the case of Reliance Industries (supra) and noting the fact that the sufficiency of own funds was pointed out by the assessee ,and further considering the order of the ITAT in th....
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....ight lines (i) Pvt. Ltd. 536964/- 1434784/- 287722/- 2259470/- (ii) J.M. Baxi & Co. 594957/- 175360/- 770327/- Total 3029797/- 18.It was pointed out from the assessment order that the contention of the assessee that no tax was required to be deducted on same, being payments made to agents of non-resident shipping companies for freight and for payments made on behalf of the non-residents ,was rejected by the A.O. for lack of evidence. He drew our attention to the findings of the A.O. page 13 of the A.O. order is as under: The above contention of the assessee is duly considered & the same is found self serving and devoid of any merit. The submission of the assessee is very general in nature. The contention of the assessee that M/s J.M. Baxi & Co M/s Freight lines (i) Pvt. Ltd. are the shipping agents of non resident ship owners namely M/s Mearks shipping and M/s Nedloyed shipping is not tenable. Apart from tendering a bald explanation to that effect, in support of the same, the assessee has not led any evidence in this regard. In the absence of any supporting evidence produced by the assess....
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....ssued by CBDT. However appellant did not submit any evidence to prove that the payment made to C and F agents was as agents of non-resident shipping companies. I agree with the assessing officer that onus is on the appellant to prove that the ocean freight was paid to non-resident shipping companies or their agents. In the absence of this, the TDS was deductible. Since appellant could not prove that payments were made to non-resident shipping companies or their agents by documentary evidence, appellant committed default by not deducting TDS. Accordingly the addition made by the assessing officer is confirmed. 20. Before us Ld. Counsel for the assessee contended that firstly it was factually incorrect that evidences of these payments were not placed before the lower authorities. He contended that all evidences were filed before the Ld. A.O. and CIT(A) also and in this regard drew our attention to the submission of the assessee reproduced by the Ld. CIT(A) at para 4.2 of his order mentioning that the photocopies of invoices raised by the assessee with respect to the impugned parties had been enclosed on specimen basis. He thereafter took us to the copies of the invoices placed bef....
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..... to adjudicate it afresh in accordance with law after considering and verifying the evidences filed by the assessee, and the contentions made by the assesseee. Needless to add due opportunity of hearing be granted to the assessee 22.1 Ground of appeal No.3 to 3.2 is allowed for statistical purposes. 23. Ground no. 4 to 4.2 relates to the issue of disallowance of expenses relating to payments made to non residents as per the provisions of section 40(a) of the Act amounting to Rs. 2,37,234/-. The grounds read as under: 4.0 The Commissioner of Income tax (Appeals) erred in upholding disallowance of Rs. 237234/- made by the AO by invoking provisions of section 40(a). The submits that observations made by the assessing officer are grossly unjustified as they have been made without affording any opportunity of being heard. The appellant further submits that disallowance made by the assessing officer is contrary to the facts and unsustainable in the eyes of law. The disallowance be quashed. 4.1 The appellant submits that under the facts and circumstances prevailing in the case there was no default in the matter of tax to be deducted at source. The appellant submit....