TaxTMI 
TaxTMI 
2023 (1) TMI 425
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....count." 3) "Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the Addition of Rs. 25,18,460/- and Rs. 35,53,900/- made on account of disputed transaction with Larsen & Tubro and TDS made from payment to Meka Dredging Pvt. Ltd." 4) "Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the Addition of Rs. 68,694/- made on account of cessation of liability." 5) "Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the Addition of Rs. 33,00,000/- made u/s. 41(1) of the IT Act." 3. The first issue raised by the Revenue is that the Ld. CIT(A), erred in deleting the addition made by the AO for Rs. 33,75,921/- being the amount of interest attributable on the diversion of loan fund. 4. The facts in brief are that the assessee in the present case is a Limited company and engaged in the business of providing Dredger and other Infrastructure Facilities. The AO during the assessment proceedings found that the assessee on one hand has borrowed the fund and incurred interest cost thereon and likewise, on the other hand, the assessee has advanced money without charging any interest thereon to its different group concerns. Accordingly, ....
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....8. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the interest was disallowed by the AO on the reasoning that there was diversion of interest bearing fund for non-commercial purposes. Admittedly, the interest free fund available with the assessee exceeds the amount of interest free advances which can be verified from the submission of the assessee before the Ld.CIT(A). the relevant extract is reproduced as under: 2.4 The Appellant was having sufficient interest free funds and accordingly no interest disallowance u/s 36(1)(iii) is justified: The Appellant states that total interest free funds as on 31/03/2012 were in excess of interest free advances hence there should not be any disallowance without indicating any instances of utilization of interest bearing funds for giving interest free advances. For the kind reference chart showing interest free funds and Interest free advances is reproduced as under: Particulars Amount (Rs) Interest Free Funds: Share Capita! 1,11,75,000 Reserves and Surplus (2,32,29,400) Sundry Creditors 2,38,90,423 Retention money of Suppli....
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.... services were rendered. There was no submission from the assessee that it has not rendered services to the party in the year under consideration. Therefore, the same was added to the total income of the assessee. 11. Aggrieved, assessee preferred an appeal to the Ld. CIT(A). 12. The assessee before the Ld.CIT(A), has filed the reconciliation statement placed on page 9 of Ld. CIT(A) order wherein it was demonstrated that the income to the tune of Rs. 49,63,500/- has been booked in the Financial Year 2012-13 whereas the TDS was deducted by the party in the Financial Year 2011-12. 13. The Ld. CIT(A), after considering the submission of the assessee allowed the grounds of appeal of the assessee in part subject to verification by the AO by observing as under: I have considered the assessment order, facts of the case and the submissions made by the appellant. The AO made the impugned addition for the reason that it did not agree that the contention of the appellant that the tax had been deducted in a subsequent year and not during the year under consideration since the appellant was following the mercantile system of accounting and therefore income would accrue in the year in which....
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....91- Rs. 32,22,031) which has not been justified/explained based on the documentary evidence. Thus, the AO treated the same as income of the assessee and added the sum of Rs. 25,18,460/- to the total income. 18.1 Likewise, the AO found that as per the form 26AS, the assessee has received an income of Rs. 35,53,900.00 from the company namely M/s Meka Dredging Pvt Ltd. which has not been shown in the profit and loss account of the assessee. Thus, the AO concluded that the assessee has unreported the impugned income of Rs.35,53,900 and added to the total income of the assessee. 19. The aggrieved assessee preferred an appeal before the learned CIT(A). 20. The assessee before the Ld.CIT(A), contended that there was reversal of income of Rs. 57,40,491.00 which was reduced from the profit and loss account. Further this amount was finally settled at Rs. 32,22,031/- by raising the invoice in the name of Larsen & Turbo. As such the assessee is very much entitled to claim the bad debt for the invoice raised in the name of M/s Meka Dredging Pvt. Ltd. for Rs.57,40,491/- and therefore there cannot be any addition to the total income of the assessee. 20.1 The assessee in respect to the additio....
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....then the assessee can claim the bad debts under the provision of section 36(1)(vi) of the Act. Likewise, if the income has been debited in the name of Larsen & Turbo for Rs.35,53,900/-, then there is no un-reported of income as alleged by the AO. Nevertheless, the Ld.CIT(A), has given relief to the assessee subject to the necessary verification to be done by the AO. Thus, we do not find any infirmity in the order of the Ld.CIT(A), and uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed. 24. The fourth issue raised by the revenue is that the Ld.CIT(A), erred in deleting the addition made by the AO for Rs. 68,694/- on account of cessation of liability. 25. The AO during the assessment proceedings found mismatch in the balance shown by the assessee vis-à-vis the balance reflecting in the books of accounts of the party namely M/s. K.B. Shipping & Company. The difference was of Rs. 26,485/- only. 25.1 Besides above, the AO also found that M/s. K.B. Shipping & Company in its books of accounts has already claimed bad debts of Rs. 42,479/- which evidences that this liability is not payable by the assessee. Accordingly, the AO made the addition of Rs. 6....
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....f the Ld. CIT(A). However, we find that the Revenue has challenged the deletion of addition of Rs.68,994/- in the ground of appeal which to our understanding is not correct. It is for the reason that the Ld. CIT(A), has not given any relief to the assessee with respect to the cessation of liability of Rs.42,470/- as the same has been confirmed. Thus, there should not be any grievance to the Revenue with respect to such addition. Thus, the ground of appeal of the Revenue is dismissed. 31. The last issue raised by the Revenue is that the Ld. CIT(A), erred in deleting the addition made by the AO for Rs. 33 lakhs on account of cessation of liability under the provision of section 41(1) of the Act. 32. The AO during the assessment proceedings found that the assessee has shown liabilities in its books of accounts for Rs.33 lakhs in the name of M/s.Wartsial India Limited. But the assessee has not furnished the necessary details such as information about the year to which it pertains, no confirmation of such party and no efforts to make the payment to such party. Thus, the AO was of the view that such liability has ceased to exist in the books of accounts and therefore treated the same a....