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TMI Blog2003 (4) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... venue, relating to deletion of addition of Rs. 48,950 on account of variation in purchase price. 2.1 The relevant and material facts for the disposal of this ground of appeal are that the AO made an addition of Rs. 58,950 under s. 40A(2)(b) of the IT Act on the basis that the purchase from the sister-concern M/s Vijay Luxmi Oil and General Mills had been made at a higher rate when compared with the average sale rate of Narma as per the report of the Market Committee as on the relevant dates. The AO, while framing the assessment was of the opinion that the rate paid by the assessee to the sister-concern M/s Vijay Luxmi Oil General Mills on 15th March, 1995 and 21st March, 1995, was excessive and the disallowance under s. 40A(2)(b) was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) deleted the impugned addition by making the following observations. "I have carefully considered the facts on record. It is judicially accepted that wherever two options are possible, then the option favourable to the assessee is to be followed. For example, in law itself, as assessee is entitled to value its stock at cost or market price whichever is lower. In the present case, the AO has ignored the transactions entered into with the same sister-concern on 26th Oct., 1994, and 1st Nov., 1994, where even as per his own working, a lower rate was paid to the sister-concern. To my mind, the addition has been made without appreciating the realities of a higher volatile market and even the average purchase price of the seller i.e., M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as these being normal business transactions where the prices fluctuated and so, in these normal business transactions, the CIT(A) in his detailed order has rightly deleted the impugned addition made by the AO. 2.4 We have considered the rival submissions, perused the records and carefully gone through the orders of the tax authorities below. In view of the detailed and well reasoned order of the CIT(A) coupled with the convincing arguments advanced by learned authorised representative for the assessee, we are of the opinion that the well reasoned and well discussed order of CIT(A) deleting the impugned addition does not merit any interference from our side and accordingly the same is upheld, and the ground No. 1 of the appeal filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9515 bales. Out of the total job charges of Rs. 16,77,613 those received from M/s Vijay Luxmi Oil General Mills constituted the major chunk at Rs. 12,43,813. However, all the abovesaid detailed arguments were unable to persuade the learned AO who was of the opinion that the interest of Rs. 3,88,089 should have been charged from M/s Vijay Luxmi Oil General Mills even in respect of trading transactions and impugned addition was accordingly made. 3.2 On appeal, learned counsel for the assessee argued before the CIT(A) that claim of interest under s. 36(iii) of the Act can be restricted only if it is proved with conclusive evidence that any interest bearing borrowed funds were utilised for purposes other than those of business. On behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s preferred on behalf of the appellant. The only conditions which are required to be satisfied by the assessee to enable it to claim interest under s. 36(iii) of the Act are as under: (a) The money must have been borrowed by the assessee (b) It must have been borrowed for the purpose of business, and (c) The assessee must have paid interest on the said amount and claimed it as a deduction. The perusal of the interest account reveals that the assessee has paid interest either to the commission agents from whom the raw material was purchased or to the bank on cash credit limits. Interest has been charged from the sister concern M/s Vijay Luxmi Oil General Mills on those payments which were made to them by drawing cheques on bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as to how he arrived at the figure of Rs. 3,88,089. Learned Departmental Representative for the Revenue, was not able to controvert these submissions made by the learned authorised representative for the assessee. Learned authorised representative for the assessee in support of his contention submitted that the learned CIT(A) has rightly deleted the impugned addition and has placed reliance on the decision of Tribunal Chandigarh Bench in the case of Gopal Timbers vs. ITO, and the decision of Tribunal Chandigarh Bench in the case of Asstt. CIT vs. M/s Sidhartha Polysters (P) Ltd. in ITA No. 20/Chandi/1996; asst. yr. 1992-93 delivered on 1st May, 2002. 3.4 We have considered the rival submissions, perused the records and carefully gone ..... X X X X Extracts X X X X X X X X Extracts X X X X
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