9911796707
TMI Blog2010 (4) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of bad debt of ₹ 80,20,000/-. 3. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. The undisputed facts of the case are that the assessee sold goods to M/s. Urmi Chemicals Industries Pvt. Ltd. since 25.05.2002 and as per the books of the assessee, the opening balance of receivable amount from the said parties was ₹ 1,80,20,000/-. As the amount was recoverable exceeded the value of securities mortgage in favour of the assessee by the said M/s.Urmi Chemicals Industries Pvt. Ltd. by ₹ 80,20,000/-, the assessee has written off the excess amount of ₹ 80,20,000/- as irrecoverable and claim as bad debt. 4. The Learned Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee should be allowed. 9. We find that in the instant case, it is not in dispute that the assessee owed from M/s. Urmi Chemicals Industries Pvt. Ltd. money on account of goods sold by it. Thus, a part of such debt was claimed by the assessee during the year as bad debt. The fact of the case including the orders passed by the City Civil Court primarily shows that the claim of the assessee was not malafide. No material was brought on record by the revenue to show that the value of properties mortgaged to the assessee was more than the value which was considered by the assessee as realizable debt. It is an admitted fact that the value of debt which was more than the value of properties mortgaged with the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has given interest free advance of ₹ 1,85,23,000/- to its sister concerns namely Ambuja Solvex Pvt. Ltd. thus the Learned Assessing Officer disallowed ₹ 1,38,988/- out of interest expenses claimed by the assessee being 12% of the amount of interest free advance given by the assessee. 13 On appeal, the Learned Commissioner of Income Tax(Appeals) confirmed the action of the Learned Assessing Officer. 14. Before us, the Assessee has pointed out that it was explained to the Learned Commissioner of Income Tax(Appeals) that interest free funds available with the assessee was to the tune of ₹ 13,01,82,411/- comprising of deposits of ₹ 25,00,000/- from Sanjeev Exports, ₹ 25,00,000/- from Anamica Gems and ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a/c and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be rejected on this count also. 9. Apart from that we have noted earlier that both in the order of the CIT(A) as also the Tribunal, a clear finding is recorded that the assessee had interest-free funds of its own which had been generated in the course of the year commencing from 1st April, 1999. Apart from that in terms of the balance sheet there was a further availability of ₹ 398.19 crores including ₹ 180 crores of share capital. In this context, in our opinion, the finding of fact recorded by CIT(A) and Tribunal as to availability of interest-free funds really cannot be faulted. 10. If there be int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal. 17. In view of the above, in our considered opinion, as the interest free funds available with the assessee was much more than the interest free advance given by it and therefore, in our considered opinion, no disallowance out of interest expenditure was warranted. We therefore, delete the disallowance of interest of ₹ 1,38,988/- and allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
