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TMI Blog2015 (10) TMI 2318X X X X Extracts X X X X X X X X Extracts X X X X ..... hruv Steel was genuine business transaction against which the assessee had made payment to Dhruv Steel." 3. In ITA No. 587/Ahd/2010 for A.Y. 2005-06, Revenue has filed the appeal on the following grounds: "1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 38,06,882/- made on account of disallowance of depreciation. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 7,72,360/- made on account of disallowance of interest expenses." 4. In ITA No. 588/Ahd/2010 for A.Y. 2006-07, Revenue has filed the appeal on the following ground: "1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 79,86,212/- made on account of disallowance of depreciation. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 24,36,981/- made on account of disallowance of interest expenses." 5. The only issue in A.Y. 04-05 is with regards to genuineness of transaction of purchase of Steel from M/s. Dhruv Steel. In A.Y. 2004-05 Assessing Officer issued show cause notice to assessee with regards to genuineness of steel transaction which reads as under: "On verification of case records and submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Neminath Steels were signed by the same person though addresses were different. M/s. Dhruv Steel had explained that the purchases from such parties were genuine and they had supplied MS Steel to assessee for construction of building and plant & machinery. Assessing Officer stated that Shri Shamalbhai R. Patel of Gayatri Trading Corporation had given him a letter that their concern had not entered into transaction with M/s. Dhruv Steel. Assessing Officer did not accept the stand of assessee for following reasons: (a) For any trader before making sales, it is required to have made purchase first. He states that purchases by Dhruv Steel was proved to be bogus. It is stated that Dhruv Steel had not made any purchase and, therefore, how can it make sales to the appellant (b) It is stated by the A.O. that the appellant had not filed documentary evidence to prove the purchase made from Dhruv Steel which actually have been received by them. He has not accepted that Dhruv Steel had remained present before him and confirmed the sales made to the appellant. (c) It is stated by the A.O. that though Dhruv Steel has not denied supply of material to appellant, Dhruv Steel has not supplied mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Dhruv Steel. Accordingly, requested to set aside the order of CIT(A) and restore that of Assessing officer. On other hand, ld. Authorized Representative supported the order of CIT(A) on the issue. 5.3 After going through rival submissions and material on record, we find that Assessing Officer noted from post search enquiry with M/s. Dhruv Steel and further enquiry with suppliers to M/s. Dhruv Steel u/s. 133(6) and concluded that purchase of steel by assessee is not genuine. He relied on the fact that payment of Rs. 2.74 crores by assessee was made to Dhruv Steel and on the same date, M/s. Dhruv Steel had made payment to M/s. Vimal Marketing. Subsequently assessee was having deposit from said M/s. Vimal Marketing. In view of this payment made by assessee had come back to him. In this regard the stand of assessee has been that steel has been purchased from M/s. Dhruv Steel. Even in reply to notice u/s. 131 by the Department, they had confirmed supply of steel to assessee. The total purchase from M/s. Dhruv Steel during the F.Y. 2003-04 amounting to Rs. 464 lakh as against which Assessing Officer has considered Rs. 347 lakh as non-genuine. In appeal, CIT(A) observed that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, disallowance made by Assessing Officer in subsequent order on point of depreciation was not justified held by CIT(A). In view of this, addition made in both years of disallowing claim of depreciation of building and plant & machinery was rightly held to be unwarranted by CIT(A) and same was rightly deleted by him. This reasoned finding of CIT(A) needs no interference from our side. We uphold the order of CIT(A) on the issue of depreciation for A.Y. 05-06 & 06-07. 7. Next issue involved in these appeals relate to disallowance of interest expenditure incurred by assessee on loan taken from M/s. Vimal Marketing. Assessing Officer made addition as under: Assesment Year Addition 2005-06 Rs.24,36,981/- 2006-07 Rs.7,72,360/- In assessment order passed for A.Y. 2004-05 Assessing Officer has observed that amount paid by assessee to M/s. Dhruv Steel towards purchase of material has come back to assessee on same day by routing through M/s. Vimal Marketing as unsecured loan. Assessing Officer contended that since loan from M/s. Vimal Marketing is nothing but the assessee's own funds routed through Dhruv Steel interest paid on said loan was not justified and same was dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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