9911796707
TMI Blog2012 (8) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... r advance made by the appellant. 2. The CIT (A) ought to have appreciated that the interest paid was wholly and exclusively for the purpose of business and therefore was fully allowable. 3. The CIT (A) erred in upholding the disallowance of 1/5 th of Telephone expenses and motor car expenses and depreciation thereon. 3. The assessee is a firm engaged in the business of trading in Dyes chemicals. The assessee filed its return of income on 30-10-2005 declaring total income at ₹ 29,520/-. The case was selected for scrutiny. During the course of assessment, the A.O. noticed that the assessee had made advances of ₹ 2,02,51,289/- out of which ₹ 1,69,51,000/- has been paid to AICO Laboratories India Ltd., on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders 288 ITR -1 (SC). With respect to the interest paid, CIT (A) observed that the interest paid was at the rate of 6%. He therefore held that the interest on advances given to AICO Laboratories India Ltd., should also be worked out on the basis of 6%. He directed the A.O. to verify the working of interest and workout the interest @ 6% and consider the disallowance. Aggrieved by the order of CIT (A), the assessee is now in appeal before us. 5. Before us, the Ld. A.R. pointed out to the fact that the balance in the account of AICO Laboratories India Ltd., includes opening balance of ₹ 1,09,35,000/- which was given in earlier financial year. There was no disallowance of any expenditure on account of interest in earlier year. He accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of the previous accounting year and, therefore, its nature and status could not be different from its nature and status as on the last day of the previous year. Regarding past years, the assessee s claims for deduction were allowed in respect of the sums advanced during those years. This could be only on the assumption that those advances were not out of borrowed funds of the assessee. This finding during the previous years was the very basis of the deductions permitted during the past years. It would not be equitable to permit the Revenue to take a different stand now in respect of the amounts which were the subject matter of previous years assessments . 9. In the circumstances, on the basis of principle laid down by Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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