AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1231
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....oy Chennai Hotels Pvt. Ltd. For this, Revenue has raised various grounds which are argumentative and hence, need not be reproduced. 3. Brief facts are that the assessee company is engaged in the business of manufacturing and trading of chemicals and in generation of power. The AO during the course of assessment proceedings noticed that the assessee had obtained loans on interest and paid interest as under:- On Fixed Loans Rs. 8,46,22,311 On Fixed Deposits Rs. 43,62,075 On Others Rs. 3,56,27,617 The AO also noticed that in regard to others, the assessee has paid interest to Managing Director amounting to Rs. 11,01,961/- out of the interest 'on others' amounting to Rs. 3,56,27,617/-. The AO also noticed from the accounts of the assessee that assessee has also advanced a sum of Rs. 27,31,12,155/- as interest free loans to its sister concern Binny Ltd., and Rs. 1,08,46,667/- to its wholly owned subsidiary company Viceroy Chennai Hotels P Ltd. The assessee before AO explained that this is for business expediency but the AO was not convinced and hence, he bank charged interest at the rate of 9% to 12% on the amount advanced to the assessee and by cumulative effect of compounding ....
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....assessment years in appeal before us. It is pertinent to mention that the decision cited by the Ld.DR in the case of K. Somasundram & Bros. supra has no application to the case of the assessee because there is no finding in that case regarding the equity share capital, general reserves, and accumulated profits and reserves of the assessee company to be in excess of the interest free loan extended." 9.4. The appellant submitted that it had accumulated profits of Rs. 167,30,35,7 15 as on 31/03/2008 and Rs. 155,86,38,071 as on 31/3/2007 and the current year's profit itself amounted to Rs. 56,86,52,18 1/-. The appellant therefore submitted that the advances to sister concerns were not from out of borrowed funds but only out of interest free funds available with them. 9.5. I have considered the submissions of the AR and the reasons given by the AO in the assessment order. As the decision of the ITAT Chennai in the appellant's own case relied on by the AR is binding on me. It is seen that the total advances to sister concerns amounted to Rs. 28,39,58,82/- only when the profit of the Current year itself was Rs. 56.86 cr. apart from the reserves and accumulated profits to the e....
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....re CIT(A). 8. The assessee before CIT(A) explained that this liability of raw materials, stores and spares for an amount of Rs. 2,52,68,564/- is on account of provision made for all the three divisions i.e., chemical, power and biomass for purchase of raw materials and stores as under:- Division Amount (Rs.) Chemical 6,40,274 Power 2,45,13,952 Bio Mass 1,14,339 Total 2,52,68,564 The assessee before CIT(A) explained that as regards to chemical division amount of Rs. 6,40,274/-, the assessee had made purchases and stock of the above goods which were received before 31.03.2008 and assessee has accounted this liability under the head 'provision for raw materials, stores and spares' without crediting the concerned suppliers account. However on receipt of invoice after 31.03.2008, the provision was reversed by giving credit to the concerned suppliers in the accounts for financial year 2008-09 relevant to assessment year 2009-10. The assessee filed paperbook and relevant invoices were submitted vide page Nos.105 to 136 but CIT(A) on perusal of paper-book and in particular, page Nos.105 to 136 noticed that the provision was made for freight expenses payable and labour charges p....
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....plain how this amount of Rs. 75,55,989/- is allowable. Hence, we confirm the order of CIT(A) on this issue. Thereby the total amount sustained on account of provision made for power division is Rs. 1,25,55,989/- and the order of CIT(A) on this, is confirmed. 13. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in making addition of non-existing sundry creditor liability to the extent of Rs. 52,99,235/- For this, assessee has raised following ground Nos.3 & 4:- "3. The Learned AO erred in making an addition towards non-existent sundry creditor liability in the sum of Rs. 52,99,235/- by comparing the outstanding balance vis a vis the balance reflected in the books of the appellant company based on the statement of account obtained from the concerned supplier. 4. The Learned AO erred in not furnishing the statement of account directly obtained from the party, M/s. Thermodyne Technologies Pvt Ltd to the appellant company for its rebuttal and filing of objections, which admittedly was obtained behind the back of the appellant company, thereby violating the principles of natural justice." 14. We have heard rival contentions ....
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.... 17. Brief facts are that the AO required the assessee to explain and file details of outstanding liability appearing in its books of accounts in the name of Associated Traders, Agra. The AO noted that the assessee has not filed any detail or evidence with regard to above claim of outstanding liability of Rs. 5,54,519/-. He added the same as non-existent liability and disallowed. Aggrieved, assessee filed appeal before CIT(A). 18. The CIT(A) considering the plea of assessee, noted that no discount is payable by assessee to Associated Traders in regard to purchases made by that party. The assessee has made provision in its books of accounts by debiting the discount account and shown the same as outstanding liability. But the assessee could not file any evidence before AO or CIT(A) to explain the outstanding liability. We also noted that there is no evidence that the assessee has given discount to the party and shown only amount outstanding. We noted that assessee is contemplating recovery of the amount from the party and not treated the same as bad debit. Once the amount is shown as outstanding, the assessee is duty bound to explain the entry by filing evidences. As there is no ev....
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....CIT(A) confirming the action of the AO making addition of provision made by assessee for ocean freight from the value of closing stock amounting to Rs. 6,60,633/-. For this, assessee has raised the following ground No.7:- "7. The Learned AO erred in making an addition in the sum of Rs. 6,60,633/- towards provision made for ocean freight from the value of closing stock as admittedly, the said value is apparently included in the value of the closing stock which has been taxed by the AO." 23. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the AO disallowed the provision made as contingent liability on account of ocean freight charges payable to one Maersk India P Ltd. It was claimed before AO and CIT(A) that assessee has paid a sum of Rs. 70,914/- on 24.03.2008 and if already paid during financial year relevant to assessment year 2008-09, then it was directed to AO to allow the claim after verification. We noted that this matter has already been referred back to the file of the AO for verification of facts and decide accordingly. We don't want to interfere in the findings of CIT(A). Let AO will examine this issue afresh and will ....