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Issues Involved:
The judgment involves two main Issues: 1. Disallowance of proportionate interest paid on borrowed capital. 2. Valuation of closing stock of 'rejected quality' of kernels. Issue 1: Disallowance of Proportionate Interest: The Assessing Officer disallowed interest amounting to Rs. 15.58 lakhs, alleging diversion of interest-bearing funds for non-business purposes. The appellant argued that certain investments and deposits were connected to business activities, while a gift to the husband should be considered a personal withdrawal. The Tribunal found investments in South Indian Bank to be for business purposes and not a diversion of funds. However, the Tribunal directed re-examination of funds given to Quilon Medical Trust and Travancore Realtors, lacking explanation. The Tribunal upheld the decision regarding the gift to the husband as a personal withdrawal. Issue 2: Valuation of Closing Stock: The Assessing Officer valued 'rejected quality kernels' at Rs. 6 per kg, differing from the appellant's valuation at Rs. 4.41 per kg. The Ld. CIT(A) directed valuation at Rs. 5 per kg, considering market prices and past valuations. The Tribunal upheld the Ld. CIT(A)'s decision, finding it reasonable and based on relevant submissions. The judgment was pronounced on 20-07-2012 by the Appellate Tribunal ITAT Cochin, involving appeals related to the assessment year 2007-08. Both parties contested the decision of the Ld. CIT(A) on the two aforementioned issues. The Tribunal provided detailed reasoning for each issue, considering the facts and submissions presented by the parties. The appeal of the assessee was partly allowed for statistical purposes, while the appeal of the Revenue was dismissed.
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