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TMI Blog2014 (2) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of CIT(A) confirmed – Decided against Revenue. Deletion of disallowance of payment – Interest on advances and loans – Held that:- The assessee has furnished the details of interest free funds available with it - the assessee was having general reserve besides share capital which was utilized for interest free advances - The Revenue has not placed any evidence on record to establish that the borrowed funds were utilized for interest free advances – thus, no corresponding disallowance can be made – there was no infirmity in the order of CIT(A) – Decided against Revenue. - ITA No.310/Lkw/2011 - - - Dated:- 7-8-2013 - Sunil Kumar Yadav And Pramod Kumar, JJ. For the Appellant : Shri K M Dixit, CIT, DR For the Respondent : Shri Abhinav Mehrotra, Adv. ORDER:- PER : Sunil Kumar Yadav This appeal is preferred by the Revenue against the order of CIT(A) mainly on two grounds, which are as under: "1. That the Ld Commissioner of Income Tax (A) has erred in law and on facts in deleting the addition of Rs.51,68,488/- made on account of Excise duty paid without appreciating the fact that the assessee itself admitted that no Excise Duty is chargeable on the it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have paid the Excise Duty out of its capital funds and should have mentioned it as a disputed amount as asset in the balance sheet. 4. Aggrieved, the assessee has preferred an appeal before the CIT(A) with the submissions that the allegation of the Assessing Officer does not affect the substance of the net profit result since the Excise Duty was paid in the given circumstances of the case. Therefore, in the books of account of the assessee entries were passed as per audited balance sheet. Moreover, these expenses are revenue expenditure u/s 37 of the Act. It was also contended before the CIT(A) that the Commissioner, Central Excise (Appeals) has decided the issue in favour of the assessee but Department has preferred an appeal before the CEGAT and the matter is still sub judice. It was also contended before the CIT(A) that the assessee was paying the Excise Duty over sale of items, which in his opinion, were exempt. This decision was taken to run the business of the assessee smoothly and without any hurdle from the Excise Department. After winning the case before Commissioner, Central Excise (Appeals), the assessee has surrendered the registration certificate under Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, therefore, he was not required to record the reasons for changing his views. But we are of the view that in such type of case, a proper application of mind is required. Once an officer has taken a particular view with respect to a particular issue and if he wants to take a contrary view for certain reasons or wants to challenge his own view before the appellate forum, he should record some reasons. Leaving apart, we have examined this issue on merit also. 7.1 Undisputedly, according to the assessee, the Excise Duty was paid under protest. He was not required to pay the Excise Duty but when the excise authorities have demanded, the assessee had paid the same. It is also an admitted fact that the assessee has gone before the Commissioner, Central Excise (Appeals) and won the case but the Department has preferred an appeal before the CEGAT. Since the assessee has paid the Excise Duty under protest, it is expenditure incidental to his business and should be allowed u/s 37 of the Act. While adjudicating the issue, the CIT(A) has also examined various judicial pronouncements and in the case of Kedarnath Jute Manufacture Co. vs. CIT 52 ITR 363 (SC) it was held that the liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty determined on a reasonable basis is allowable. It is also on record that this expenditure has been allowed in the previous year. In the result under the circumstances and for the reason above and the decision in the various case law relied upon by the appellant, the addition is deleted." 7.2 Since no specific infirmity has been pointed out in the order of CIT(A) except placing heavy reliance upon the assessment order, we confirm the order of CIT(A) as he has dealt with the issue in right perspective. Accordingly, this ground of the Revenue is rejected. 8. So far as the other ground in relation to deletion of addition of Rs.7,67,437/- is concerned, we find that the Assessing Officer has made the addition on account of interest on advances and loans and in this regard it is noticed that the assessee has given advance of Rs.53,79,247/- to others and Rs.3,56,821/- to staff members but no interest has been charges on these advances. The Assessing Officer has disallowed the corresponding interest paid on the borrowed funds. 9. In appeal, the assessee has contended that the assessee was having huge interest free funds which was utilized in interest free advances. In support of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re me as in forgoing paragraphs, the addition of Rs.7,67,437/- made by AO is deleted, as discussed. Thus, Ground No. 3 of appeal is allowed." 10. Aggrieved, the Revenue has preferred an appeal before the Tribunal and placed heavy reliance upon the order of the Assessing Officer. 11. The learned Counsel for the assessee, on the other hand, has submitted that the interest free funds were available with the assessee which were utilized for interest free advances, therefore, no corresponding disallowance of interest can be made. 12. Having heard the rival submissions and from a careful perusal of the record we find that the assessee has furnished the details of interest free funds available with it. As per the details, the assessee was having general reserve of Rs.58 lakhs besides share capital of Rs.3,01,000/-, which was utilized for interest free advances. The Revenue has not placed any evidence on record to establish that the borrowed funds were utilized for interest free advances. Therefore, no corresponding disallowance can be made. Accordingly, we find no infirmity in the order of CIT(A) who has rightly adjudicated the issue. 13. The Cross Objection is filed in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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