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TMI Blog2013 (7) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT BOMBAY] if there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. Once assessee has interest free fund available with it, then the interest free advance given to associate concerns is clearly covered in favour of assessee. Against revenue. Foreign tour expenses disallowed - CIT(A)deleted the addition - Held that:- As the assessee company is dealing in a number of engineering and technical activities and projects. Further, directors have undertaken foreign tour to attend trade fair, conferences etc. in UK, Japan, Singapur, Taiwan etc. This finding is not controverted by CIT, DR at the time of hearing and he only relied on the assessment order. Thus deletion made by CIT(A) is quite reasonable and appeal of revenue is dismissed. Disallowance of deduction u/s. 80IA on the basis of turnover as reported in TDS certificate - CIT(A) deleted the disallowance - according to assessee, it has shown turnover with different Government Departments in the previous year under consideration on accrual basis whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act but no evidence was filed before AO and hence, he disallowed the expenses at Rs.22,91,155/-. The assessee before CIT(A) filed certificate for non-deduction of TDS u/s. 194C(4) of the Act and CIT(A) deleted the disallowance by observing as under: As regards M/s. Excel Movers Pvt. Ltd. the assessee has claimed that it had certificate for deducting tax at lower rate but it could not produce a copy of such a certificate before the A.O. However, during the appellate proceedings the assessee submitted a certificate u/s. 194C(4) issued by ITO, Ward-1(2), Kolkata vide his certificate no.1 u/s. 194/04-05/02 dated 05.04.2004 according to which for payment made by other parties on contracts/subcontracts to M/s. Excel Movers Pvt. Ltd. the TDS was to be deducted at the rate of NIL% which means not to be deducted. Therefore, the reason of the assessee for not deducting the TDS on payment to this party looks justified. Hence, this amount will also not be disallowable u/s. 40(a)(ia). Further, the CIT(A) deleted the disallowance in respect to Basuki Builders and Transport, Ma Tara Enterprises, Shri Bajrang Alloys and Ajab Enterprises for the reason that these parties have supplied mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Ld. CIT(A) has erred in holding that no disallowance of interest can be made in respect of opening balance of interest free advance of Rs.3,28,54,782/- when no such disallowance was made in the past, without appreciating that each assessment year is separate and principle of resjudicata is not applicable to income tax assessment. 6. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO has made disallowance on advances to associate concerns free of interest as against the interest paid on borrowed funds, which are following: Sl. No. Name of the Associate Concern Amount Balance as on 31.03.04 (Rs.) Net amount paid during the year F.Y. 2004-05 (Rs.) Total (Rs.) 1. BMW Infotech Pvt. Ltd. 19020.00 2700.00 21720.00 2. BMW Infrastructure Pvt. Ltd. 28341.00 2700.00 31041.00 3. BMW Telelink Ltd. 20015.00 0.00 20015.00 4. JIT Steel Service Centre Pvt. Ltd. 5449732.00 1219937.00 6669669.00 5. BMW Ceramics Pvt. Ltd. 17442154.00 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble Apex court in the Case of Munjal Sales Corpn. (supra), wherein Hon ble Apex Court has considered the issue as under: Application of the 1961 Act to the facts of this case. As stated above, in this batch of civil appeals we are concerned with the assessment years 1993-94, 1994-95, 1995-96, 1996-97 and 1997-98. At this stage, it may be mentioned that as far back as in August/September, 1991, the assessee herein had given interest-free advances to its sister concerns. These advances stood reduced over a period, till the assessment year 1997-98. Each year the balances stood reduced. Further, vide order dated January 3, 2003, the Tribunal held, for the assessment year 1992-93, that the assessee had given interest-free loans from its own funds and not from interest bearing loans taken by the firm from third parties and consequently the assessee was entitled to claim deduction under section 36(1)(iii). In other words, the Tribunal held that the loans were given for business purposes. Similarly, for the assessment year 1993-94, the Tribunal had taken the view that the said loans given to the firm s sister concerns were for business purposes. Accordingly, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t free advances are given out of the interest free funds available to the assessee. It is also covered in favour of the assessee by the decision Hon ble Bombay High Court s observations, in the case of Reliance Utilities Power Ltd. (supra), as follows: If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. Respectfully following the decision of Hon ble Supreme Court in the Case of Munjal Sales Corpn., (supra) and the decision of Hon ble Bombay High Court in the case of Reliance Utilities Power Ltd. (supra), we uphold the order of CIT(A). Therefore, revenue s appeal on this issue is dismissed. 8. The next issue in this appeal of revenue is against the order of CIT(A) deleting the foreign tour expenses of Rs.19,92,799/-. For this, revenue has raised following no. 4: That in the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting foreign travel expenses of Rs.19,92,799/-, by holding that the foreign travel was for business purpose, particularly when the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K, Japan, Singapur, Taiwan etc. This finding is not controverted by Ld. CIT, DR at the time of hearing and he only relied on the assessment order. We find that deletion made by CIT(A) is quite reasonable and we uphold the same. This ground of appeal of revenue is also dismissed. 11. Now, we take up ITA No.247/K/2010, AY 2003-04. The only issue in this appeal of revenue is against the order of CIT(A) deleting the disallowance of deduction u/s. 80IA of the Act on the basis of turnover as reported in TDS certificate and this certificate is issued by Govt. Department. Revenue has raised following ground no.1: That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting disallowance Rs.4,57,26,314/- on account of deduction u/s. 80IA of the Act in the reassessment order on the presumption that the turnover of Rs.7,97,96,652/- as per TDS certificates issued by Govt. department was on Cash System of Accounting whereas the assessee had shown turnover of Rs.12,69,91,416/- on mercantile basis, without making any enquiry from the Government departments to verify the contention of the assessee. 12. We have heard rival submissions and gone through facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed the same as deduction u/s. 80IA. In the assessment we are required to determine the income of the assessee as per the Income-tax Act. For the purpose of Income-tax Act, the turnover of the infrastructure division of the assessee is to be taken as Rs.12,69,91,416/-. The turnover reflected in TDS certificates is a part of this turnover only. For the purpose of determining deduction u/s.80IA the turnover used for calculating the Gross Total Income of the assessee has to be used. There is no logic in using the lower turnover of Rs.7,97,96,652/- reflected in the TDS certificates for determ ning the deduction u/s.80IA. The A.O. cannot be allowed to have his cake and eat it too. It is absolutely absurd that for taxing the income the A.O. has used the higher figure of turnover but for allowing the deduction u/s.80IA he has used the lower figure. In view of the above discussion, I feel that the assessee has rightly claimed the deduction of Rs.4,57,26,314/- u/s.80IA and the same has been rightly allowed in the original assessment completed on 30-03-2006. Therefore, I delete this disallowance made by the A.O. in the reassessment order. We find no infirmity in the reconcilia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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