2014 (11) TMI 1079

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..... ween the value of stock-in- trade as per the books of accounts and the statement which was submitted by the assessee to its banker for availing credit facilities by way of hypothecation of the stock - Held that:- the assessee has proved on record that the group of companies were maintaining stock at a common place. The stock of the other group concerns were given in the Bank statement. This fact was also brought to the notice of the Bank. Similarly, a letter given by the Bank Manager to the Director of the assessee was on record, which is indicative of the fact that the assessee has informed the Bank regarding common stock position at one place of the sister concerns. In this way, the assessee has duly discharged the onus of explaining the .....

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..... nding of fact that the assessee had availed loans from Banks only and that no new loans were taken in the current year and therefore, the A.O was not justified in making the disallowance of interest since the A.O. had not made any disallowance of interest for the earlier years. 3.1 The CIT(A) also recorded a finding that the assessee had inflated the stock merely to obtain larger funds from the Banks and there was, actually, no excess stock. Therefore, no addition was made on account of difference between the stock shown in the books of accounts and that shown in the statement submitted to the Bank. Accordingly, the CIT(A) partly allowed the appeal filed by the assessee. Being aggrieved by the order passed by the CIT(A), appeal was filed .....

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..... ive debtors, it was contended that, in principle, it was decided not to charge interest for advances made to the sister concerns and not to pay interest on the loans from the sister concerns. No interest bearing fund has been given as interest free advances. 7.1 The A.O recorded the finding that had the assessee charged interest on the outstanding balances against the proprietary concern, then it would recover an amount of ₹ 1,60,790/-. The said amount could take care of the interest payment to the Bank to the tune of ₹ 1,36,277/-. In this manner, the disallowance of claim of interest payment was made by the A.O. 8. However, the CIT(A) deleted the disallowance on the ground that the A.O has not proved the nexus between the in .....

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