9911796707
TMI Blog2015 (11) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs. 74,96,376/- made by the Assessing Officer after rejecting the account books by invoking the provisions of Section 145(2) when there were sound reasons for the said rejection? 2. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in law in holding that the revenue had not filed appeal before the Hon'ble ITAT on the same point in the assessment year 1988-89 and therefore accepting the findings of the learned CIT(A) for the said year, disregarding the settled law that each assessment year is a separate year? 3. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in law in upholding the order of the learned CIT(A) deleting the addition made by the Assessing Officer on account of interest on interest free loans amounting to Rs. 4,43,730/- given to sister concern or persons covered under section 40A(2) of the Income Tax Act in contradiction with the judgment of jurisdictional High Court in CIT, Ludhiana vs. Abhishek Industries Limited, 298 ITR 1 (P&H)? 4. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in law in confirming the order of learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther appeal before the Tribunal which was dismissed. iii)The Assessing Officer disallowed Rs. 4,78,845/- in connection with inauguration of MDF plant of Tohana. Although the assessee had separately debited expenses on account of travelling by business associates to attend the inaugural function of the assessee company at Tohana, yet another amount of Rs. 1,34,063/- was claimed on account of travel by others. The bills regarding this expenditure were furnished on the last date of hearing and no vouchers were produced. Further the bills pertained to expenses incurred after 12.4.1992 i.e. the date of inauguration. The CIT(A) deleted the addition of Rs. 4,78,845/- by relying upon judgments of Bombay High Court in CIT vs. Nirlon Synthetics Fibres Chemicals Limited, (1982) 137 ITR 1 and Calcutta High Court in CIT vs. Hindustan Aluminum corporation Limited, (1989) 176 ITR 206. The Tribunal upheld the view taken by the CIT(A). The appeal filed by the assessee before the Tribunal was partly allowed whereby out of disallowance of Rs. 4,97,347/- sustained by CIT(A) on account of interest given as interest free loan to sister concerns, the further relief of Rs. 80,000/- was given to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authorities. The assessee did maintain a stock register in respect of the MDF Division which was also produced for the Assessing Officer's verification but his objection was that a stock register showing consumption of raw material was not produced. The total consumption of the raw material has been given in the financial statements which are audited and these figures have not been questioned at all. As regards the objection that higher figures of stock were given to the Bank,it is seen that the figures of cotton stalks given to the bank were actually less than the figure shown in the books. In respect of the other stock, the assessee's submission before the Assessing Officer that the figures given to the bank were based on theoretical assumptions and they were substituted by actual figures available to the assessee later has not been doubted and there is no evidence to show that the assessee did not make such corrections. Even before us, such a stand was not taken. As regards the objection of the Assessing Officer that the moisture content shown by the assessee in the logs of eucalyptus tree was not correct and that the assessee ought to have put in place a system by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free advance other than made to Southern Synthetic Limited and the amount of disallownace in respect of Southern Synthetic Limited amounting to Rs. 4,43,730/- was deleted. The Tribunal following its decision in the earlier years further deleted the disallowance of the interest referable to the advance made to Novika Investment amounting to Rs. 80,000/- while disallowance of interest referable to the advances made to other four sister concerns was sustained. The relevant findings recorded by the CIT(A) read thus:- "Ground No.4 is with regard to an addition of Rs. 9,41,077/- made by the Assessing Officer on the reason that the assessee had made interest on borrowed funds. It is stated by the appellant that the advances have been made by the company out of own funds from share capital, reserves and surplus and not out of borrowed funds. It is further stated that nowhere department has co-related that the borrowed funds are used for the purpose of advancing the amount to these parties. The appellant has relied upon the case of CIT vs. Indian Explosive Limited, (1991) 192 ITR 144. The disallowance of interest on the advanced amount to Southern Synthetic Limited was dealt with by my p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to interest free advances made to Southern synthetics Limited and Rs. 4,97,347/- relating to the sister concerns. From page 18 of the assessment order, it is seen that the amount of Rs. 4,97,347/- consists of the following:- Interest free advances to Interest i) Nuchem Industries Rs. 2000/- ii) Ratan Chand Harjas Rai Rs. 64,000/- iii) Novika Investment Rs. 80,000/- iv) Nuchem Investment Rs. 3,35,062/- v) Nuchem engineering Rs. 16,085/- The case of the sister concerns has already been considered by us in the appeals for the assessment years 1991-92 and 1992-93. We have also considered the case of interest referable to the advances made to Southern synthetics Limited in those years. As in earlier years, the department has also come in appeal for this year vide ground No.(iv) in its appeal challenging the decision of the CIT(Appeals) to delete the interest of Rs. 4,43,730/-. This has also been considered by us in the appeals filed by the department in the earlier two years. In the earlier year's appeals, we have deleted the interest referable to advances made to Novika Investment following the order of the Tribunal for an earlier year. However, the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors, stockists, agents of company have visited MDF Nuwud plant at Tohana, who have stayed in New Delhi at Hotel Surya Sofital. Similarly an amount of Rs. 1,34,063/- have been incurred on account of travel and other expenses of the dealers, stockists, distributors, Company's officials and agents, who have come from all over the country to participate in the inauguration function. Another item of disallowance Rs. 1,54,051/65 pertaining to the inauguration expenses of Pune office. It is stated by the appellant that the conference was organized at Bombay and Pune where dealers, distributors, architects, designers and builders have participated in the conference and inauguration of Pune branch. The expenditure includes travellign expenses, expenses incurred on hoardings, wall painting etc. It is further stated that the expenditure had been incurred wholly and exclusively for the purpose of business. The appellant has relied upon the case of Nirlon Synthetics Fibers Chemicals Limited, (1982) 137 ITR 1 (Bom.) and CIT vs. Hindustan Aluminium Corp. Limited, (1989) 176 ITR 206 (Cal.) in which the inauguration expenses are held allowable. In view of the decision of various High Courts, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
