TaxTMI 
TaxTMI 
2015 (8) TMI 1607
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....Revenue. ITA No. 1/PNJ/2015 (A.Y : 2006-07) : 2. In this appeal the Assessee has raised the following grounds : "1. On the facts and circumstances of the case and in law the learned A.O. erred in sustaining estimated addition of Rs. 50,00,000/- after making separate addition of i) Unexplained expenditure Rs. 10,00,000/- ii) Amount paid in cash towards purchase of property Rs. 13,67,380/- iii) Proportionate bank interest to sister concern Rs. 19,32,187/- & iv) Disallowance u/s 40(a)(ia) Rs. 9,44,900/- aggregating to Rs. 52,44,467/- . 2. The learned A.O erred in taking total income returned as Rs. 3,46,49,980/- instead of actual figure of Rs. 3,36,49,980/- which is also evidenced by original Asst order u/s 143 (3) dt. 30.12.2008. 3. The learned A.O erred in making addition of Rs. 10,00,000/- as unexplained investment. 4. The learned A.O erred in making disallowance of amount of Rs. 13,67,380/-paid towards purchase of property. 5. The learned A.O erred in making disallowance of proportionate bank interest of Rs. 19,32,187/- ignoring the fact that assessee had sufficient own funds to cover interest f....
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.... erroneously taken the total income returned by the Assessee at Rs. 3,46,49,980/- instead of the actual figure returned by the Assessee of Rs. 3,36,49,980/-. The ld. AR drew our attention to the original assessment order wherein the said figure of Rs. 3,36,49,980/- is evidenced. It was the submission that the error in the order of the AO was liable to be corrected. 7. In reply, the ld. DR vehemently supported the order of the AO. 8. In regard to ground no. 5 of the appeal, it was submitted by the ld. AR that the AO had disallowed proportionate bank interest of Rs. 19,32,187/- on the ground that the Assessee had diverted interest bearing funds for non-business purposes. It was the submission that the Assessee had advanced an amount of Rs. 2,09,30,199/- to the Assessee's sister concern, M/s. On & Offshore Hitech Engineers Pvt. Ltd. It was the submission that the advance was made during the relevant assessment year. It was the submission that the said advance was given towards piling work for barge filling jetty. It was the submission that the Assessee had also taken packing credit for its export business from Canara Bank and had also taken cash credit loan from the State Bank o....
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....,000/-, the requirement of Sec. 194I did not arise and no TDS was liable to be made. The ld. AR further drew our attention to the decision of the Hon'ble Allahabad High Court in the case of Vector Shipping Services Pvt. Ltd. reported in 38 taxmann.com 77. It was the submission that there was no outstanding or any amount payable as on the year end and consequently, the provisions of Sec. 40(a)(ia) did not get attracted. It was the further submission that the decision of the Hon'ble Allahabad High Court in the case of Vector Shipping Services Pvt. Ltd. was the subject matter of SLP before the Hon'ble Supreme Court by the Revenue and the same had also been dismissed. It was the submission that consequently no addition was liable to be called for to the extent of Rs. 1,00,000/-. 11. In reply, the ld. DR vehemently supported the order of the AO and the ld. CIT(A). 12. We have considered the rival submissions. In regard to ground no. 1 representing addition of Rs. 50,00,000/- it was noticed that the AO has not mentioned anything regarding this addition of Rs. 50,00,000/- in the assessment order. All that the AO has stated in the computation of total income is that this ....
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....ntract. Thus, this amount would have to be treated as interest free advance given to M/s. On & Offshore Hitech Engineers Pvt. Ltd. Once this is so and it is noticed that the Assessee does have sufficient funds to give this interest free advance insofar as the Assessee has Capital account of Rs. 2.20 crores and cash and bank balances of Rs. 2.81 crores and the Assessee has disclosed profit for the relevant assessment year after tax at Rs. 2.25 crores, respectfully following the principles laid down by the Hon'ble Supreme Court in the case of Munjal Sales Corporation referred to supra as also the decision of the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd. (supra) wherein it has been held - "If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd.'s case (supra) had the occasion to consider the decision of the Calcutta High Court in Wool combers of India Ltd.'s case (supra) where a similar....
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.... appeal of the Assessee is partly allowed. ITA No. 2/PNJ/2015 (A.Y : 2007-08) : 18. In this appeal the Assessee has raised the following grounds : "1. The learned A.O erred in making addition of Rs. 51,19,000/- as unexplained expenditure. 2. The learned A.O erred in making disallowance of proportionate bank interest of Rs. 32,16,825/- ignoring the fact that assessee had sufficient own funds to cover interest free loan given and borrowed funds were not diverted. 3. The Appellant craves leave to add, alter, amend or modify any of the grounds of appeal and/or adduce any further records, evidences during the course of appeal." 19. At the time of hearing it was submitted by the ld. AR that the Assessee did not wish to press ground no. 1, consequently, the same stands dismissed as not pressed. 20. In regard to ground no. 2 of the appeal, it was submitted by the ld. AR that the issue was identical to ground no. 5 of the Assessee's appeal in ITA No. 1/PNJ/2015 for A.Y 2006-07. It was the submission that during the relevant assessment year the AO had disallowed proportionate bank interest. It was the submission that during the relevant assessment year ....
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....6. It was submitted by the ld. AR that the Assessee did not wish to press ground no. 1 of the appeal, consequently, the same stands dismissed as not pressed. 27. In regard to ground no. 2, it was submitted by the ld. AR that the issue was identical to ground no. 5 in the Assessee's appeal in ITA No. 1/PNJ/2015 for the A.Y 2006-07. It was the submission that during the relevant assessment year the advance to M/s. On & Offshore Hitech Engineers Pvt. Ltd. had increased by an amount of Rs. 2.14 crores. It was the submission that the Capital account shows a balance of Rs. 11.76 crores, the cash and bank balances was Rs. 16.50 crores and the profits after taxation was Rs. 5.54 crores. 28. In reply, the ld. DR vehemently supported the order of the AO and the ld. CIT(A). 29. In regard to ground no. 3, it was submitted that the Assessee did not wish to press the said ground, consequently, the same stands dismissed as not pressed. 30. In regard to ground no. 4, it was the submission by the ld. AR that the AO had disallowed an amount of Rs. 16,45,000/- representing rent paid to Communidade of Sirsaim. It was the submission that the issue was identical to ground no. 6 in ITA No. 1/....
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....ained at Hospet in Karnataka. It was the submission that subsequently on account of ban by the Hon'ble Supreme Court in respect of iron ore mining, the said purchases were returned and the amount received back and the reversal entry has been passed during the assessment year 2010-11. It was the submission that during the assessment year 2010-11 the Assessee had treated the Hospet purchases as cancelled to an extent of Rs. 20,84,53,000/- and excess income of Rs. 38,88,210/- had also been disclosed on account of the difference in the rates of valuation of the closing stock. The ld. AR drew our attention to the Profit & Loss account for the year ended 31.3.2010 wherein in the computation of total income the Assessee has shown the amount of Rs. 16,75,25,784/- for the A.Y 2008-09 and an amount of Rs. 3,70,39,006/- for the A.Y 2009-10 totaling to Rs. 20,45,64,790/-. The return was filed for A.Y 2010-11 on 7.2.2013. It was the submission that as the said amount has already been disclosed in the return for the A.Y 2010-11, no addition was called for in the relevant assessment year. 35. In reply, the ld. DR vehemently supported the order of the AO and the ld. CIT(A). 36. We have c....
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.... law the learned A.O. erred in in making disallowance of purchases of Rs. 3,70,00,000/-. 2. The learned A.O erred in making disallowance u/s 40A(3) of Rs. 5,21,00,000/- Ignoring the fact that the payments out of business expediency were made within the limits as specified u/s 40A(3). 3. The learned A.O erred in making addition of Rs. 16,00,000/- as stock difference. 4. The learned A.O erred in making disallowance of proportionate bank interest of Rs. 81,00,000/- ignoring the fact that assessee had sufficient own funds to cover interest free loan given and borrowed funds were not diverted. 5. The learned A.O erred in making disallowance of compensation paid of Rs. 5,00,00,000/- for clearing the hindrances holding it as capital expenditure ignoring the fact that expenditure of capital nature out of the total payment was already capitalized. 6. The learned A.O erred in making addition of Rs. 6,17,00,000/- u/s 69 on the basis of provisional B/S submitted to bank. 7. The learned A.O. erred in making disallowance u/s 40(a)(ia) of Rs.54,21,880/- 8. Reasons assigned for making the addition are insufficient and contrary to law a....
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.... the AO as capital expenditure. It was the submission that the Assessee is in the business of raising of ore. The Assessee had entered into an agreement on 1.7.2006 for a period of 7 years. It was the submission that the Assessee had made total payment of Rs. 11,10,80,146/-. Out of the said amount, an amount of Rs. 6,86,77,818/- was towards acquiring the surface rights which was in the nature of capital expenditure and the same had also been recorded by the Assessee in its books of accounts as such. The balance of Rs. 4,24,02,328/- was made on account of compensation for loss of cashew crops and loss on account of dust pollution to villagers having plantation in the area. The Assessee did not derive any enduring benefit by making this payment and the Assessee had consequently claimed the same as revenue expenditure. The expenditure was incurred only to facilitate the smooth functioning of the Assessee's business and out of commercial expediency. The ld. AR drew our attention to the agreement between the mine owner and the Assessee wherein in clause no. 12 it is clearly admitted that the Assessee does not claim any lease rights in respect of the mine and that the Assessee is only an....
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.... has been added. The corresponding correction has been shown in the secured loans wherein in the audited Balance sheet the secured loan is shown at a figure of Rs. 46 crores, in the provisional Balance sheet shows an amount of Rs. 57,76,00,000/-. It was the submission that right from the time of the search the Assessee has categorically submitted that the said provisional Balance sheet is not supported by any documents and it was prepared only for getting better financial deal from the banks. It was the submission that no addition was called for in the hands of the Assessee. 51. In reply, the ld. DR drew our attention to page 30 of the assessment order to submit that the AO had considered the difference between the income and expenditure shown in the provisional Balance sheet to derive the profit before taxation at Rs. 7,27,00,000/- and as the Assessee has only disclosed it as Rs.1,10,00,000/- during the year, the difference had been treated as undisclosed income of the Assessee. The ld. DR vehemently supported the order of the AO and the ld. CIT(A). 52. In regard to ground no. 7 which was in respect of disallowance made by invoking the provisions of Sec. 40(a)(ia), the ld. A....
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....he said expenditure as claimed by the Assessee as revenue expenditure. 58. In regard to ground no. 6 representing the addition on the basis of the provisional Balance sheet submitted to the banks, the Assessee has been able to substantially prove the reason for differential in the provisional Balance sheet insofar as the current liabilities have also been added to the current assets. Further, no supporting evidence has been found in the course of the search to support any of the figures as has been found in the provisional Balance sheet which is also being called a projected Balance sheet. In the circumstances, as it is clear that the said Balance sheet prepared itself is an erroneous Balance sheet and is not on the basis of any accounting principles, the addition made by the AO, and as confirmed by the ld. CIT(A) stands deleted. Thus, this ground stands allowed. 59. In regard to ground no. 7, as the same is not pressed by the Assessee, the same is dismissed as not pressed. 60. In the result, the appeal of the Assessee is partly allowed. ITA No. 5/PNJ/2015 (A.Y : 2010-11) : 61. In this appeal the Assessee has raised the following grounds : "1. The learned A.....
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....d. AR that the issue was against the addition representing alleged payment of Rs. 1,43,00,000/- to M/s. Chougule & Co. It was the submission that in the course of the search a paper was found wherein it was mentioned that the Assessee was to pay an amount of Rs. 1,43,00,000/- to M/s. Chougule & Co. for procuring iron ore from ONDA CCL, Gavanem CCL and Costi tailing. It was the submission that the said paper clearly showed that cash was to be paid. It was the submission that as M/s. Chougule & Co. was not able to source the iron ore from Gavanem CCL & Costi tailing, the Assessee had not paid the amount. It was the submission that however the Assessee had purchased 20389.61 MT from ONDA CCL as against 20000 MT and the same was also accounted in its books of accounts. It was further submission that Gavanam CCL had sold iron ore tailings of 13571.75 MT from Pale mine and thus total purchases was to an extent of 33961.36 MT valued at Rs. 1,31,37,794/- and the same was adjusted against the advance paid of Rs. 1,99,68,200/- and the balance of Rs. 68,30,206/- was returned by M/s. Chowgule & Co. to the Assessee. It was the submission that in the course of the search this was also clarified ....