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TMI Blog2014 (1) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... cified date prescribed under the relevant Act. Thereafter, the AO has exhibited the delay in the payment to the Government account in the form of a chart. 4. The Ld. CIT(A) considered the grievance of the assessee at para-3 on page-2 of his order and confirmed the disallowance made by the AO. 5. We have carefully perused the orders of the lower authorities and the dates as exhibited on page-2 of the assessment order. We find that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of CIT Vs Alom Extrusion Ltd., 319 ITR 306 wherein it has been held that if the amount is deposited before filing the return of income, the same has to be allowed. In the case before us, we find that the return of income was filed on 31.10.2006 and all the payments have been made before the date of filing of the return, therefore, respectfully following the decision of the Hon'ble Supreme Court (supra), the AO is directed to delete the addition of Rs. 1,17,847/-. Ground No. 1 is accordingly allowed. 6. Ground No. 2 relates to the disallowance of Rs. 20,43,163/- on account of bad debts claimed by the assessee. 7. This issue has been discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, we restore this issue back to the files of the AO. The assessee is directed to establish the nexus of advances vis-à-vis his business by bringing cogent material evidences on record. The AO is directed to verify the details after giving reasonable opportunity of being heard to the assessee. Ground No. 2 is allowed for statistical purposes. 12. Ground No. 3 relates to the disallowance of the claim u/s. 80IB in respect of bank interest received on fixed deposits. 13. The AO has discussed this disallowance at para-4.4. on page-5 of his assessment order. The assessee has claimed deduction u/s 80IB(4) of the Act. The AO noticed that the assessee has claimed deduction u/s. 80IB(4) of the Act on the amount of interest on fixed deposit with bank amounting to Rs. 1,82,858/-. The assessee was asked to justify his claim of deduction. On receiving no reply, the AO went on to treat the interest income on fixed deposit as not eligible for the claim of deduction u/s. 80IB of the Act. 14. Aggrieved, the assessee carried the matter before the Ld. CIT(A) and strongly contended that the assessee was required to give the bank deposits for furnishing letter of credit/guarantees in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cash credit facilities. The AO further observed that the assessee has converted capital work in progress into capital assets under the head ' Plant and Machinery' amounting to Rs. 1,47,50,160/- and under the head of 'electrical equipment' amounting to Rs. 3,98,336/-. The date of such conversion of capital work in progress into the capital asset was not made available. The assessee was asked to explain why the claim of interest on term loan should not be capitalized till the date of such conversion and accordingly the AO proposed to disallow the interest so capitalized. 19.1. The assessee explained that interest on term loan amounting to Rs. 6,38,590/- has been capitalized out of debit of interest of Rs. 38,86,525/- as interest to banks. However, the AO on verification, noticed that the entire interest has been transferred to Profit and Loss account and the interest has not been capitalized as claimed by the assessee and accordingly disallowed Rs. 6,38,590/- out of the finance cost. The AO further noticed that the assessee has given loans and advances of Rs. 40,52,300/- to its sister concern on which the assessee has not charged any interest. The assessee stated that the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital work in progress into capital asset. However, we also find that the AO has categorically verified that the entire interest has been charged to profit and loss account. This needs to be further verified being a factual matter. Therefore, in the interest of justice, this issue is restored back to the files of the AO. The assessee is directed to substantiate its claim that it has capitalized interest upto the date of conversion of capital work in progress into capital asset and has claimed only that interest which pertains to post operation period. The AO is directed to verify such details filed by the assessee after giving a reasonable opportunity of being heard to the assessee. So far as other interest of Rs. 3,00,000/- is concerned, since the assessee has not brought any cogent material evidence on record before us to substantiate its claim that the amount has been advanced out of own capital, we do not find any reason to interfere with the directions of the Ld. CIT(A) that the disallowance should be on proportionate basis. We, accordingly, confirm the findings of the Ld. CIT(A) so far as disallowance of interest of Rs. 3,00,000/- is concerned. Ground No. 4 is accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee, the Ld. CIT(A) at para-5.4 on page 12 of his order observed that the AO has simply infer that the difference between the actual production and the standard production as per standard input output norms is the amount of suppressed sales without considering the actual shown by the assessee. The Ld. CIT(A) further observed that the variation in the raw material consumption between the actual and standard input output ratio as worked out by the AO is only 0.99% which is very marginal. The Ld. CIT(A) strongly relied upon the opinion given by IIT Delhi Professor. The Ld. CIT(A) finally concluded that the AO made the addition only on the basis of inference from standard input output ratio and not on the basis of any evidence. According to the Ld. CIT(A), the AO has made the additions only on assumption and inferences. The Ld. CIT(A) was convinced that the assessee's contention is supported by technical data and expert opinion and accordingly deleted the entire addition of Rs. 94,18,600/-. 28. Before us, the Ld. DR strongly supporting the findings of the AO submitted that the Ld. CIT(A) has relied upon the opinion of the Professor of IIT Delhi without realizing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly treated the commitment charges as income derived from business of industrial undertaking is eligible for deduction u/s. 80IB(4) of the Act. 33. Before us, the Ld. DR strongly supported the findings of the AO. 34. The Ld. Counsel for the assessee reiterated what has been submitted before the Ld. CIT(A). 35. We have carefully perused the orders of the lower authorities. It is not in dispute that the commitment charges are in the nature of interest on delayed payments received from the customers which is directed related with the sales of the assessee. The issue is squarely covered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in the case of Nirma Industries Ltd. 283 ITR 402 as there is a direct nexus between the commitment charges and the business of the assessee. Further drawing support from the decision of the Hon'ble Supreme Court in the case of liberty India Ltd, we have no hesitation to hold that the commitment charges are derived from the business of the industrial undertaking and therefore eligible for claim of deduction u/s. 80IB(4) of the Act. Findings of the Ld. CIT(A) are confirmed. Grievance of the Revenue is accordingly di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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