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TMI Blog2013 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard and remit the issue back to A.O. for verifying the claim with evidence produced by the assessee in support of the claim. If the assessee is able to prove that the claim was based on invoices raised by Shri Pawar and if the transactions are genuine, it will have to be allowed irrespective of the treatment given by Shri Pawar in his books. The A.O. shall give an opportunity to the assessee for proving its case. Regarding disallowance of Interest, the loans were given to subsidiary companies. Also, without doubt, such subsidiary companies were all in Karnataka and had acquired lands for the purpose of erection of wind farms and the assessee’s business was to erect, commission and sell windmills. In our opinion, commercial interest of the assessee in its subsidiaries stood well demonstrated. - ld. CIT(Appeals) was well justified in relying on the decision of Hon’ble Apex Court in the case of S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] for deleting the disallowance. - Decided against the revenue. Regarding deletion of disallowance of advance written off by the assessee - the claim of advance itself cannot be accepted when by assessee’s own version, its transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing withdrawn. Assessee requested the A.O. to consider the revised computation while completing assessment. However, the A.O. was of the opinion that this was a fresh claim made by the assessee and assessee could not make such a fresh claim otherwise than through a revised return. A.O. noted that assessee had time upto 31.3.2008 for filing a revised return and there were seven days left after the date of the order of Settlement Commission, for filing such a revised return. Having not filed a revised return, A.O. was of the opinion that the claim of the assessee, made through a revised computation, could not be accepted in view of the decision of Hon ble Apex Court in the case of Goetze (India) Ltd. v. CIT (284 ITR 323). 5. In its appeal before ld. CIT(Appeals) , pleading of the assessee was that withdrawal of income was consequential to the order of Settlement Commission and the ratio of decision of Hon ble Apex Court in the case of Goetze (India) Ltd. (supra) would not apply. As per the assessee, this was not a fresh claim, but, was a reduction required to be made on account of prior period adjustment of income. Reliance was also placed on decision of Mumbai Bench of this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the receipt of the order of the Settlement Commission, in its original return had reversed the excess provision made for the earlier years against the provision for the impugned assessment year. This endeavour resulted in an income of Rs. 3,16,38,858/-, since the gross excess provision reversed was Rs. 13,90,60,987/-, whereas, the provision for warranty which was allowable for the relevant previous year was Rs. 10,74,22,129/- only. No doubt, assessee was very well within its right to claim the provision for the relevant previous year in view of the decision of Hon ble Apex Court in the case of Rotork Controls India P. Ltd. (supra). The question left here is whether the excess provision for earlier years Rs. 3,16,38,858/-, which stood nullified by the Settlement Commission order, could be withdrawn by the assessee by way of a revised computation, otherwise than through a revised return. We find much substance in the claim of the assessee that Settlement Commission s order dated 24.3.2008 might not have been readily available to the assessee by 31.3.2008, being the last date available for filing a revised return. It was therefore left with no other go other than to file a revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 3,93,48,570/- on protective basis. 12. In its appeal before ld. CIT(Appeals) , claim of the assessee was that it had received invoices from Shri D.H. Pawar for services rendered by him and expenses were properly entered in the books of accounts. According to assessee, invoices were also produced before the A.O. and mode of treatment of the amounts by Shri Pawar in his books was not relevant in so far the claim of the assessee was concerned. Ld. CIT(Appeals) was appreciative of this contention of the assessee. According to him, the fact of expenditure and the genuineness thereof were not disputed. Assessee had rightly claimed such expenses as revenue outgo and disallowance could not be made. He, therefore, deleted the disallowance. 13. Now before us, learned D.R., strongly assailing the order of ld. CIT(Appeals) , submitted that assessee in first place could not place before the A.O. invoices for full amount but, had only produced invoices for part of the claim. Shri Pawar had shown the amount as advance and therefore, assessee could not be allowed to claim it as revenue expenditure. A.O. was very much correct in making the disallowance. 14. Per contra, learned A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated in Karnataka to facilitate assessee s business interest. However, A.O. was not appreciative. According to him, the subsidiary companies had a separate role of purchasing lands and selling them and there was no rationale in the claim of the assessee that loans were given to such subsidiary companies free of interest for commercial expediency. He, therefore, made a prorata disallowance of Rs. 1,62,14,635/- out of total interest claim of Rs. 6,45,76,000/-. 19. In its appeal before ld. CIT(Appeals) , argument of the assessee was that subsidiary companies had to be floated in Karnataka since only companies registered in Karnataka could acquire lands there. As per assessee, lands were required for erection of wind farms and such loans were advanced by the assessee for its business interest, since it had substantial interest in the subsidiary companies. In any case, according to assessee, the loans were taken in earlier years and the taxable income of the assessee in various years starting from 2001-02 till the impugned assessment year 2006-07 totalled to Rs. 3,17,68,29,790/-. Relying on the decision of Hon ble Apex Court in the case of S.A. Builders v. CIT (288 ITR 1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the Revenue for assessment year 2006- 07 is partly allowed for statistical purpose. 25. Now, we take up Revenue s appeal for assessment year 2005- 06. Two issues have been raised by the Revenue of which, one is regarding disallowance of pro-rata interest on interest free funds advanced to subsidiaries which was deleted by ld. CIT(Appeals) . 26. We have already dealt with this issue at para 22 of this order in Revenue s appeal for assessment year 2006-07. 27. This leaves us with the only other issue which is regarding deletion of disallowance of advance of Rs. 1,00,92,400/- written off by the assessee. 28. Short facts apropos are that the assessee had, in the relevant previous year, claimed a deduction of Rs. 1,06,98,000/- as irrecoverable advances written off. As per the assessee, the amount represented advances given by it for purchases which had to be written off subsequently. Again as per the assessee, the sum of Rs. 1,06,98,000/- comprised of following items:- Grep (India) Private Limited Rs. 1,00,000 Generation Charges O M (TNPL Deposit Reversal) Rs. 2,50,000 Grep (India) Private Limited Rs. 1,75,980 Simplex Castings Limited Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,06,98,381/- made by the A.O. 30. Now before us, learned D.R., strongly assailing the order of ld. CIT(Appeals) , submitted that assessee had, before Settlement Commission offered Rs. 5,95,43,410/- as income and was now trying to claim a part thereof as bad debt in the impugned assessment year. According to learned D.R., there was no purchase and the whole of the alleged transactions with Sambhav Steel Distributors were bogus and therefore, write-off of any advance representing such bogus transaction could not be allowed. 31. Per contra, learned A.R. supported the order of ld. CIT(Appeals) and submitted that the actual purchases, which were admitted by the assessee before Settlement Commission as not having been made from M/s Sambhav Steel Distributors, came to Rs. 4,94,51,010/- against the offered sum of Rs. 5,95,43,410/-. According to him, the balance of Rs. 1,00,92,400/- was an advance that was not existing. Hence, in order to write it off from the balance sheet, the bad debt claim became imperative. The claim, according to him, should not have been disallowed and ld. CIT(Appeals) was correct in deleting this disallowance. 32. We have perused the orders and heard the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is that out of Rs. 5,95,43,410/-, a sum of Rs. 1,00,92,400/- was only an advance and since this amount continued to appear in its balance sheet, it was required to effect a write-off and thus the claim of bad debt was to be allowed. We are unable to appreciate it for two reasons. In the first place, the claim of advance itself cannot be accepted when by assessee s own version, its transactions of purchase from M/s Sambhav Steel Distributors were all bogus. In the second place, if allowed, the effect will be that income of Rs. 5,95,43,410/- admitted by the assessee before Settlement Commission for assessment year 2004-05 would get reduced by Rs. 1,00,92,400/-. In our opinion, assessee cannot be allowed to approbate and re-approbate. It cannot say that the purchases were all bogus but, advances were genuine. It cannot say purchases were bogus only for Settlement Commission but, these were true when the matter comes before the Tribunal. We are of the opinion that ld. CIT(Appeals) fell in error in deleting the disallowance made by the A.O. The disallowance of Rs. 1,00,92,400/- made by the A.O. therefore stands reinstated. 33. Ground No.2 stands allowed. 34. In the result, app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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