9911796707
TMI Blog2015 (2) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 36(1)(iii) of the Income Tax Act, 1961 (the Act). 2. The assessee is in the business of import and export of diamonds. The return of income was filed on 25/09/2008. The return was selected for scrutiny assessment and statutory notices were accordingly issued and served upon the assessee. During the course of scrutiny assessment the AO noticed that the assessee has paid interest on loans obtained from banks to the tune of Rs. 14.52 crores. The AO further observed that the assessee has given advances for purchase of business premises in Bharat Diamond Bourse. The total advances comes to Rs. 7.70 crores. Since the advances were for the purchase of fixed assets, which are not put to use the AO was of the opinion that there should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Reliance Utilities & Power Ltd.,313 ITR 340(Mum) has laid down the principle that if there are funds available both interest free and overdraft and/or loans taken, then a presumption would arise that investment would be out of interest free funds generated or available with the assessee. 4. Per contra, Ld. DR strongly supported the findings of the Revenue Authorities. 5. We have carefully perused the orders of the authorities below and the judicial decision brought to our notice in the light of the balance sheet figures filed before us. It is an undisputed fact that assessee was having own funds at Rs. 219.86 crores at the beginning of the year and Rs. 180.05 crores at the end of the year. It is also an undisputed fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,01,75,486/-. In effect, the assessee has shown substantial gain from the mark to market treatment. The explanation of the assessee was dismissed by the AO, who was of the firm belief that the loss or gain is only notional and contingent. Drawing support from the CBDT Instruction No.3 of 2010 the AO disallowed Rs. 2,59,623/-. The assessee carried the matter before Ld. CIT(A), but without any success. 8. Before us, the Ld. Counsel for the assessee reiterated what has been stated before lower authorities. Ld. Counsel for the assessee pointed out that the Revenue Authorities have proceeded on a mistaken fact that the assessee has cancelled the forward contracts and, therefore, the contracts are speculative in nature, whereas the loss is on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
