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TMI Blog2014 (7) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted by the ld. Authorized Representative (AR), the assessee's counsel, that penalty in the instant case stands levied qua four adjustments made to the assessee's income in assessment, being: i. disallowance u/s.14A of the Act amounting to Rs. 70,689/-; ii. disallowance regarding provision for doubtful debts at Rs. 1,25,393/-; iii. proportionate interest paid, amounting to Rs. 15,96,499/-, disallowed on interest-free loans advanced to directors; and iv. disallowance for rent paid at Rs. 1,20,000/-. Placing a copy of the order by the tribunal in its' own case for the relevant year (in ITA No.5091/Mum/2011 dated 25.09.2013) on record, he continued that the matter in the quantum proceedings had travelled to the tribunal, which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscuss the relative merits of the case for each of the disallowances qua which penalty stands levied and sustained. 3.1 The assessee was observed to have made investment in shares at Rs. 11.26 lacs. It having, besides own funds, borrowed funds (outstanding as on 31/3/2005 at Rs. 527.26 lacs), incurring interest at Rs. 103.55 lacs, the same stood disallowed on a proportionate basis u/s.14A of the Act. The assessee's balance-sheet for the year ending 31/3/2005 (as well as 31/3/2004), forming part of the record (PB pgs. 19-38), stands perused. The assessee's share capital is at Rs. 175 lacs. However, as against this, it has unabsorbed losses at Rs. 440.69 lacs and Rs. 424.30 lacs as at 31/3/2005 & 31/3/2004 respectively, so that in effect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated in the balance-sheet, so that the same (provision) is in effect and substance only a write off, as explained by the apex court in Vijaya Bank vs. CIT [2010] 323 ITR 166 (SC). However, this does not appear to be so in-as-much as the provision reduced (from the amount of total Debtors) in accounts (Rs. 3,86,350/-) is higher than the amount of provision debited to the operating statement (profit and loss account) for the year, so that the provision made and claimed is carried forward from year to year under a separate account, in which case it is only a provision, precluded for deduction u/s.36(1)(vii). No explanation toward claim of a provision having been rendered by the assessee at any stage, we confirm the levy of penalty subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar addition, again at the said sum of Rs. 1.20 lacs, had been effected for A.Y. 2001-02, and which had not been appealed against by the assessee before the tribunal. The facts of the case as recorded in the assessment order reveal that the disallowance had been made toward rent to a director at the rate of Rs. 10,000/- per month. Further, an interest-free deposit of Rs. 100 lacs had also been made in respect thereof. The disallowance had been effected by the Revenue by merely doubting the transaction; the assessee being unable to furnish the copy of the agreement or any evidence of the ownership of the said property. We find the Revenue's case in the penalty proceedings as not tenable. This is as a disallowance u/s. 40A(2)(a) could onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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