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TMI Blog2015 (8) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing issues:- A.Y 1997-98 A.Y 1998-99 a) Interest income Rs.2,74,315 Interest income Rs.5,25,000 b) Interest income Rs.1,50,000 (Rs.3,75000+Rs.1,50,000) c) Depreciation Rs. 2,0321 Depreciation Rs. 18,992 Travelling & Conveyance Rs. 15,476 Rs.4,44,636 Rs.5,89,468 3. With the assistance of the ld. Representative, we have gone through the record carefully. It emerges out from the record that this is the second ground of litigation upto the Tribunal. The tribunal in the first round has set aside the issue to the file of the of the AO vide its order dtd. 30-05-2006 passed in ITA Nos.501, 1854/Kol/2003. In pursuance to the tribunal's ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n recognizing the loans to this company in its books of account. Therefore, it ought to have shown interest income on such advances. Accordingly, the AO has made an addition of Rs. 1,50,000/- to the income of the assessee for both the assessment years under consideration. 5. The AO has also made additions of Rs. 2,74,315/- and 3,75,000/- for both the assessment years under consdieration. This represents to the accrual of interest on the money advanced to M/s. Khaitan Hostombe Spinels Ltd. The assessee has contended that this company has also stopped making the payment of interest. The probability to recover of the principal amount is in doubt. Therefore, the assessee did not recognize the interest income. It was also contended that the Den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reveal that as far as loan given to M/s. S.S Industries Ltd are concern, these were given in the year 1990. The debtor has paid interest upto 1992, but thereafter stopped payment. The assessee has not recognized interest income from assessment year 1997-98, by that time more than three years have already been expired. Thus, alleged interest income cannot be assumed and deserves to be deleted in view of the said decision of the Hon'ble Supreme Court in the case of State Bank of Travancore (supra). 7. As far as loan given to M/s. Khaitan Hostombe Spinels Ltd is concern, this loan was given on 08-07-1996. It is also in the same assessment year. The evidence produced by the assessee relates to the AY 2003-04. In AY 1997-98, it cannot be assum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of new business activity relating to Muradabad Plant. According to this, new business plant is not relating to existing business of the assessee. It is not shown whether this business was ultimately started or not. Therefore, he disallowed the claim of the assessee.
11. On due consideration of the facts and circumstances, we do not find any merit in this ground raised by the assessee because the assessee has failed to establish that this expenditure were incurred only and exclusively for the purpose of the business of the assessee. This issue of assessee's appeal is liable to be dismissed.
12. In the result, both the appeals of the assessee are partly allowed as stated above.
Order pronounced in the open court on 6.5.2015. X X X X Extracts X X X X X X X X Extracts X X X X
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