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TMI Blog2012 (11) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is allowed - deductible loss – Order of CIT(A) is confirmed. Addition of Rs.18,200/- made u/s 14A – Held that:- Having regard to the exigency of business and the non-optional investment to be made by the assessee on the direction of the Punjab government, the impugned addition cannot be made, as held by the CIT(A ) - ground of appeal of appeal of the revenue is dismissed. Addition of Rs.2,84,420/- made on account of interest capitalized on proportionate basis, pertaining to the pre-operative period - fund borrowed for the purchase of machinery – Held that:- following the decision on identical issue in assessee's own case, this ground of appeal of the revenue is dismissed. Assessee's claim worth Rs. 7,09,457/- in respect of reducing the income Valuation of Closing Stock - CIT(A) considered that if an addition on consistent application of method of accounting is made in any particular year, then allowance for depletion in closing stock worked out on the basis of some accounting method, deserves to be allowed. Accordingly, the claim of the assessee was allowed by the CIT(A) - No infirmity in the findings of the CIT(A), and therefore, the same are upheld. Ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on account of interest on amount outstanding against the sister concern of the assessee, considering it advance for non-business purpose. 4. In the course of present appellate proceedings, it was stated that Ground No.1 is covered against the assessee in ITA No. 920/Chd/2009 A.Y. 2006-07 and ITA No. 1293/Chd/2010 A.Y. 2007-08, order dated 08.02.2012. 5. We have carefully perused and considered the rival submissions and the issue raised by the revenue in Ground No.1 vis- -vis the issue adjudicated by the Tribunal in ITA No. 920/Chd/2009 (supra) in assessee's own case. The identical issue has been adjudicated by the Tribunal in assessee's own case against the assessee. Respectfully following the said decision, issue is adjudicated against the assessee. The relevant part of the decision is reproduced hereunder : 10. In Ground No.4, revenue contended that the CIT(A) erred in law and on facts in deleting the addition of Rs.72,000/- , made on account of disallowance of interest u/s 36(1) (iii) of the Act . The AO found that M/s Upper India Special Casting Ltd. as an associate concern of the assessee company. No contract has been entered into by the appellant with this comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in para 3.2 of the order dated 20.08.2010 f or the assessment year 2007-08, relevant par t of the same are reproduced hereunder : 3.2 I have considered the submissions of the AR. First addition of Rs.7,68,000/- has been made on ac count of unaccounted interest income earned out of the books of ac count of the assessee and for that , the AO has relied upon the finding of the AO as given in assessment year 2006-07. Above findings have been discussed from pages 2 to 5 and it has been stated that last year , the amount of Rs.3,96,725/- was disallowed as interest income earned out of the books of account in respect of certain notings on one piece of paper found during the course of survey conducted on 22.2.2006. 17. A perusal of the findings of the ld. CIT(A) , as reproduced above, clearly reveals that the impugned addition is consequential in nature and hence, in view of the findings recorded by the ld. CIT(A) and decision of the ITAT in assessee's own case for assessment year 2006-07, the ground of appeal is dismissed. 7( i i ) Following the order of the Tribunal in assessee's own case, this ground of appeal of the revenue is dismissed. 8. In Ground No.3, reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account. The second possibility would only warrant an addition of the ross profit on such possible unaccounted sales. However it also needs to be kept in focus that the appellant company is having turnover running into hundreds of crores with returned income of Rs.23,60,000/- and therefore the likely hood of the discovered discrepancy on physical verification being unaccounted sales is highly unlikely. The totality of circumstances in which claim of loss has been made does not point out to anything other than genuine business loss and therefore the same is allowed. 9. Having considered the factual-matrix of the case, we consider it deductible loss and hence, we do not find any ground to interfere with the finding of the CIT(A). 10. In Ground No.4, revenue contended that CIT(A) has erred in law and on facts in deleting the addition of Rs.18,200/- made u/s 14A on the income claimed as exempt to tax. Ld. 'DR' placed reliance on the order passed by the AO, whereas ld. 'AR' supported the findings of the CIT(A). 11. We have carefully perused the rival submissions, facts of the case and the relevant record. The AO, found that assessee made an investment of Rs.5 lacs in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) erred in law and on facts in deleting addition of Rs.2,84,420/- made on account of interest capitalized on proportionate basis, pertaining to the pre-operative period, as the fund borrowed for the purchase of machinery, keeping in view the ratio of decision of Hon'ble Punjab Haryana High Court reported in 286 ITR 1 CIT V Abhishek Industries Ltd. 15. In the course of present appellate proceedings, it transpired that identical issue has been covered in assessee's appeal in ITA No. 1293/Chd/2010 (supra) assessment year 2007-08. The relevant findings, as recorded in para 18 19 by the Bench, while adjudicating the ground raised in ITA 1293/Chd/2010 (supra) is reproduced hereunder : 18. In Ground No.2, revenue contended that ld. CIT(A) erred in deleting addition of Rs.10,00,909/- made on account of capitalization of interest on capital work in progress, in view of the provisions of Section 36(1) ( i i i ) and explanation 8 to Section 43(1) of the Income- tax Act . The identical issue has been adjudicated by the Bench in assessee's appeal f or the assessment year 2006-07, against the revenue and in favour of the assessee. Findings of the ld. CIT(A) in respect of such issue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Closing Stock Asstt. Year Opening Stock effect Closing Stock effect Total effect 2004-05 1013611 1092746 79135 2005-06 1092746 913988 (-) 178758 2006-07 913988 1075236 161248 2007-08 1075236 2296520 1221284 2008-09 2296520 1587063 (-) 709457 19. The assessee also filed assessment order for the assessment year 2005-06 to 2007-08 to establish the contention made by the appellant in the matter. The CIT(A) , held that the department has been accepting the addition on account of adjustment made in the valuation of closing stock and therefore, the depletion in the closing stock arrived at by following the same method of accounting, should have also been allowed. The AO, has not disputed the claim of the assessee in the matter and has disallowed the same on the ground that it should have been claimed in the revised return. The CIT(A) considered that if an addition on consistent application of method of accounting is made in any particular year, then allowance for depletion in closing stock worked out on the basis of some accounting method, deserves to be allowed. Accordingly, the claim of the assessee was al l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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