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TMI Blog2012 (8) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with the basic facts as to what is the actual purpose of advancing the loan to the subsidiary and whether it is for the purpose of business of the assessee. It has also to be ascertained whether the writing off was approved by the Board of Directors. Interest levied u/s 115P - Held that:- We fully agree with the CIT (A) that declaration of dividend is not automatic upon finalisation of accounts and presence of profits and reserves. The declaration of dividend is within the domain of Board of directors and the management and the date of declaration of dividend is when it is actually declared by the Board. From the materials on record it is very much clear that the declaration of dividend was made on 24-9-2003 and the tax on dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y, J.M.: These cross appeals filed by the assessee and Department, are directed against order dated 8-8-2011 of CIT (A)-V, Hyderabad passed in ITA No.0306/JCIT- 16/CIT(A)/2010-11 and it pertains to the assessment year 2003- 04. For the sake of convenience, these appeals are taken up together and disposed of by this combined order. 2. First, let us deal with ITA No. 1774/Hyd/2011 filed by the Revenue. Revenue has raised four grounds. Ground Nos. 2 and 3 are effective grounds. Ground No.2 relates to the decision of CIT (A) allowing bad debts written off of ₹ 52.85 lakhs. 3. Briefly the facts are, the assessee is a PSU of the Central Government working under the Ministry of Steel. Initially, assessment was completed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the addition by filing an appeal before the CIT(A). In respect of ₹ 52.85 lakhs advanced to NMDC, SARL, Madagarcar the CIT (A) found it to be a wholly owned subsidiary of the assessee and the amount was advanced to it for its operations. The subsidiary could not conduct business properly which resulted in the amount becoming irrecovaerable. The CIT (A) found that the assessee in assessment year 2004-05 also had advanced similar loan to another of its 100% subsidiary M/s NAM India Mineral Development Corporation, Nambia and the loan became irrecoverable on account of lack of proper operations by the subsidiary. The CIT (A) in that case allowed the claim of bad debt. Following the order passed for the assessment year 2004- 05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er back to the file of the AO for examining the issue afresh keeping in mind the observations made by us in this regard. The AO shall afford a reasonable opportunity of being heard to the assessee. 7. Ground No.3 relates to interest levied u/s 115P by he AO and deleted by the CIT (A). 8. Briefly the facts are the assessee company declared a dividend of ₹ 39,64,71,600 on 24-9-2003 and paid the tax on dividend on 3-10-2003. The AO while completing the assessment held that in the profit loss a/c.,the proposed dividend of ₹ 39,64,71,600/- has been shown as profit available for appropriations . Since accounts have been prepared on 31-3- 2003 the declaration of dividend must be deemed to have been decided on 31-3-2003. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd raised by the Revenue. 11. In the result, the appeal by the Revenue is allowed in part as indicated above. ITA No.1791/Hyd/2011- (Assessee s appeal): 12. The assessee s appeal is against disallowance f bad debts written off of ₹ 3.00 crores paid to FCI. 13. Briefly the facts are in course of the reassessment proceeding the AO asked the assessee to explain why the advance of ₹ 3,53,30,050/- being capital in nature should not be treated as capital loss. The assessee explained that clause 24 of the Memorandum of Association authorises the assessee to invest any money, which is not required for time being in such investments not being shares or stocks in the company. Therefore, the assessee has parked the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res loan given to FCI of an amount of ₹ 150 lakhs has been recovered from FCI and included income and tax has also been paid thereon. It appears from the order of the CIT (A) that though this fact was also placed before him it has not at all been considered. We therefore direct the AO to verify whether the amount of ₹ 1.5 crores recovered from FCI has been offered as income by the assessee. If the aforesaid amount has been shown in the income and tax has been paid then disallowance has to be restricted to ₹ 1.5 crores. The AO shall give reasonable opportunity of hearing to the assessee before finalising the proceedings. 15. In the result, the appeal filed by the assesseee is treated as allowed for statistical purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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