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TMI Blog2014 (2) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority under sub-section (4) of section 250 of the Act, being a quasi-judicial power, it is incumbent on him to exercise the same, if the facts and circumstances justify - The CIT(A) has failed to exercise his appellate jurisdiction u/s 250 of the Act - The learned CIT(A) didnot admit and consider the evidence produced before him by the assessee - The documents relied upon by the assessee are very much relevant and necessary for the just and proper decision of the case - The issue has been restored for fresh adjudication. - ITA No.410/M/2012, ITA No.294/M/2011 - - - Dated:- 5-2-2014 - Shri D. Karunakara Rao And Shri Sanjay Garg,JJ. For the Petitioner : Shri Shekhar Gupta, A.R. For the Respondent : Shri B.P.K. Panda, D.R. ORDER Per Sanjay Garg, Judicial Member: Above noted appeals preferred by the assessee relevant to different assessment years are being disposed off with this common order as the facts and issues involved therein are identical in nature. For the sake of convenience, facts have been taken from ITA No. 410/M/12. 2. The sole ground raised by the assessee in this appeal is relating to sustaining of the interest disallowance of Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso of past years when the investments were made. It is very much possible that an assessee may have say Rs.10 Crs of share capital and reserves but no cash balance to invest and that he utilizes the O.D. a/c or borrowed funds for the purposes of making interest free advances. Thus, the comparison of share capital plus reserves vis-a-vis investment cannot lead to conclusion that investments were made out of interest free funds. He further observed that in the case of 'CIT Vs. Reliance Utilities' (Supra), a clear finding had been recorded that the assessee had interest-free funds of its own which had been generated in course of year. But in the instant case the assessee had not shown that sufficient interest free funds were generated in the course of year and that interest free advances had sprung from these own funds. He therefore held that the interest disallowance was justified. However, he accepted the alternate plea of the assessee that the A.O. should have compared the gross interest received with interest calculated under product method. He thus sustained the addition to the extent of Rs.4,58,039/- (578670 - 120631). Being aggrieved, the assessee has preferred the present app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, when the fact of diversion of higher rate of interest bearing funds into lower interest yielding investment was apparent and established on the file, there was no question of drawing any presumption of use of own funds as the presumption can generally be drawn only to the facts which otherwise cannot be established or proved by way of direct evidence and such type of presumptions, if not held to be conclusive proof of the facts to be established by the express provisions of a statute, are always rebuttable. The peculiar facts of the present case make it quite distinguishable from that of the case of 'CIT Vs. Reliance Utilities' (supra). 9. However, the contention of the ld. AR that in day to day business, it is for the assessee to see how to manage its business has some force. Assessee can show from the fund flow statement that interest free funds were available with it on the date of investment. Even though the assessee may not show in the absence of separate fund flow statement or separate accounts relating to business loans/transactions viz-a-viz. investments made from own funds, but if the assessee is able to show the possibility and anticipation of availability of ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in this appeal has taken the following two grounds : "1. The learned CIT(Appeals) has erred in law and on the facts of the case in sustaining the order of the AO disallowing interest of Rs.12,73,633/-. 2. The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the order of the AO disallowing Rs.16,18,692/- u/s. 40(a)(ia) of the Act." Ground No.1: 12. The issue involved in this ground relating to the interest disallowance is identical to the issue raised above in ITA No. 410/M/12 for A.Y.2008-09. In view of our observations and findings given above, this issue is restored to the file of the AO to decide it afresh accordingly. Ground No.2: 13. In this ground the assessee has contested the confirmation of disallowance made under section 40(a)(ia). The AO observed that the assessee had debited Rs.16,18,692/- against Bhavnagar Unit as Clearing, Forwarding and demurrage charges. After verification it was found that the assessee had not deducted TDS on these payments and he thus disallowed the said expenditure u/s.40(a)(ia). 14. Before the ld. CIT(A), the authorised representative of the assessee furnished the details of expenditure disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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