2015 (8) TMI 1596

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....ht on record by the AO during assessment proceedings. 2. In doing so, the CIT (A) has not appreciated the fact that the resolution dated 01.04.2007 passed by the Board of Directors of M/s Auchite Chemicals Pvt. Ltd. is nothing but a colourable device to circumvent the provisions of the Act to defer the tax liability, which the assessee is actually liable to. 3. The CIT (A) has erred in law and on facts in deleting the addition of Rs. 35,62,864/- without appreciating the fact that the resolution was signed by only Smt. Deepa Tandon in the capacity of Director of the company and agreed by Shri Rajeev Tandon in the capacity of Depositor only to suit the convenience of the assessee to get away with his tax liability. ....

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....ase, the assessee has to prove that the income (interest) is not recognized or not taken into account due to uncertainty in collection of the income. In the instant case, there was a Board's Resolution (which has been extracted above) and to which the appellant was also signatory; and had certainly curtailed the "right to receive" such interest amount during the year. In that view of the matter, the assessee has clearly demonstrated as to why there was uncertainty in collection of the impugned interest income and, therefore, under the given peculiar facts of the case, it has to be held that such amount was not liable to be included in the income of the assessee (for the instant asstt. year) either on the accrual basis or on receipt basi....

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....ny with which the assessee also agreed amounts to granting loan to the borrower company at lesser interest for the time being but it may go up in case the borrower company gets deduction in its income tax assessment. Hence, in our considered opinion, it cannot be termed as a colourable device. We also find that learned CIT (A) has followed two judgments of Hon'ble apex court rendered in the case of Southern Technologies Ltd. vs. JCVIT, 320 ITR 577 and in the case of CIT vs. Hindustan Housing and Land Development Trust Ltd,. 161 ITR 524. In the first case, although the dispute was different i.e. allowability of Provision of NPA as per RBI Guidelines and this issue was decided against the assessee but following observation in Para 31 of this ....