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TMI Blog2012 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... account of interest. Decides in favour of revenue. Disallowance on account of deferred revenue expenditure – AO made addition of 4/5th cable charges paid to electricity department by assessee – Held that:- As onetime payment made was neither resulted in creation of an asset nor the amount is refundable. Non-payment lead to disconnection of electricity supply and disrupt the business of the assessee. Therefore amount spent by the assessee towards cable amount to be revenue expenditure in nature and is allowable for deduction for the year in which it is incurred. Decide in favour of assessee. - ITA No.164/Ahd/2009 - - - Dated:- 13-7-2012 - SHRI A. MOHAN ALANKAMONY AND SHRI KUL BHARAT, JJ. Appellant by Shri S.N. Divatia, AR Respondent by Shri B. Kulshreshtha, Sr. DR ORDER PER A. MOHAN ALANKAMONY: The assessee has filed this appeal aggrieved by the order of the learned CIT(A)-VI, Ahmedabad in appeal No. CIT(A)-VI/Ward 1 (2)/75/07-08 for assessment year 2004-05 dated 16-10-2008 passed u/s 143 (3) read with section 250 of the IT Act. 2. The assessee has raised five grounds in its appeal. However the learned AR has pressed only grounds No.2.1 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not proper because weight of different bardan could vary. This variation, even though small, but when considering large quantity of wheat purchased, could make a big difference. (iv) In normal circumstances, production of maida should be 64% to 65% which in the case of the assessee appeared to be a maximum of 60% only. (v) On the other hand, production of bran was on higher side which is 26% to 28% when whole atta is not produced and up to 24% t0 25% when whole atta is produced. Thus, assessee s production of the main item which was of higher value had been suppressed. (vi) Due to the above mentioned reasons, the records maintained by the assessee for stock of raw materials, production, sales, closing stock etc were found to be adjusted and not on the basis of actual day to day production and therefore cannot be relied upon. 4. The learned AO for the above mentioned reasons rejected the books of accounts of the assessee and made addition on account of suppression of production amounting to Rs.13,21,439/- with the following observations: As has been discussed in the above para that production of maida shown by the assessee is 60% which in normal condition should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he machinery, the produce procured by the assessee from various regions which are of various varieties etc. Further, the revenue has not pinpointed any discrepancy on the physical quantitative recording of facts in the books of accounts. In these circumstances, we are of the considered view that rejection of the books of account by the revenue is not warranted and addition made thereof for suppression of production for Rs.13,21,439/- is also not justified. Therefore, we hereby delete the addition made by the learned AO which was further sustained by the learned CIT(A) with respect to suppression of production for Rs.13,21,439/-. Grounds No.3.1 and 2.1(a) raised by the assessee are accordingly allowed in its favour. 9. Ground No.2.1 (b): Confirming addition of Rs.54,367/- made on account of interest expenses:- During the course of assessment proceedings it was noticed by the learned AO that the assessee had paid interest @15% and thus suffered expenditure of Rs.19,60,926/- for the loans received by it. It was further observed by the learned AO that the assessee had made advances to M/s. T. N. Associates @ 12%. On being queried as to why the assessee had advanced loan at a lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate). In the given facts and circumstances, the action of the Assessing Officer on this ground is hereby confirmed. Hence the appeal is dismissed on this ground. 11. The learned AR reiterated what was submitted before the learned AO and the learned CIT(A) while the learned DR supported the orders of the revenue. 12. Having heard both the sides, we also do not find any reasons as to why the assessee had extended loan to M/s. T. N. Associates at a lower rate of interest than the rate of interest paid by it for securing such funds. The rate of interest of 15% is quite nominal when it comes to private borrowings and the assessee should not have had any difficulty in receiving such interest from open market or from known parties. Further, it is quite relevant to note that the assessee has suffered interest @15% from its borrowing and the same fund is advanced charging lesser interest @12%. The assessee further has not come out with any cash flow or fund management statements to substantiate its claim that interim surplus of cash is advanced to earn interest to minimize expenditure on account of interest. Considering the facts and circumstance of the case, we do not have any hesitat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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