9911796707
TMI Blog2016 (10) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner of Income Tax (Appeals) has erred in law and on the facts of the appellant's case in confirming the action of the Ld. A.O. of disallowing interest paid Rs. 14,00,195/- u/s. Section 36(1)(iii) of the Act. Both the lower authorities have erred in law and on facts of the appellant's case in not appreciating the fact that entire expansion has been carried out from own funds and hence no part of interest is disallowable. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on the facts of the appellant's case in confirming the order of the Ld. A.O. of making an addition of Rs. 3,10,014/- on the erroneous plea that the appellant has under invoiced its sale of scrape. Both the lower authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. After considering the detail provided by the assessee, the assessing officer stated that no doubt during the year under consideration the assessee has made addition to capital work-in-progress at Rs. 5.52 lakhs only, however, there was an opening balance of capital work-inprogress at Rs. 1,80,50,823, but the assessee failed to show that the fixed assets were purchased out of non-interest bearing fund. The assessing officer noticed that in the immediate preceding financial year, the assessee had taken term loan to the extent of Rs. 46,69,304 and unsecured loan amounting to Rs. 1,06,00,000 , during the year under consideration the term loan was taken at Rs. 28 lakhs,however, the interest expenses increased during the current year to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account of not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction." This proviso clearly cast an obligation on the assessee to keep complete and accurate details of sources of funds which have been utilized for acquisition of an asset for extension of existing business or profession. When AO asks the assessee to explain as to whether any capital has been borrowed for acquisition of a capital asset, then the assessee mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were utilized towards long term investments of the company as appearing in its balance sheet. Regarding the opening balance of capital WIP Rs. 1,80,50,823/- it was stated by the Ld. counsel that audit accounts for the year 31-03-2005 revealed that during the previous year 2004- 05 relevant to the assessment year 2005-06, the company has received Rs. 1,25,00,000/- towards share capital and the capital WIP increased from Rs. 14,88,029/- to Rs. 1,54,94,775/- in the A.Y. 2005- 06. There were no borrowings in the year either by way of secured loans from banks and FIs or from individuals etc. as unsecured loans. In fact, there is a reduction in loan portfolio and increase in capital WIP financed by the company's own funds by way of share cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and surplus which were used for purchase of fixed assets. The lower authorities has not established that assessee company purchased the fixed assets out of the non-interest bearing funds. In view of above stated facts and findings the addition sustained by the Ld. CIT(A) is not justified, accordingly we allow this ground of appeal of the assessee. Ground No. 2 6. As per the fact of the case on the basis of statement recorded during the course of survey for A.Y.2007-08 the Assessing Officer noticed that the assessee company has under-invoiced the sale of scrap by Rs. 8000/- per M.T. The assessee objected that the statement recorded in the financial year 2007-08 relevant to Assessment Year 2008-09 cannot be made basis for addition in the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the statement on the basis of which the addition was made not relevant to the year under consideration. On the other hand, the ld. Departmental representative relied on the order of the lower authorities. We have heard both the sides and perused the material on record. We find The Ld. Commissioner of Income Tax(A) has correctly sustained the addition up to Rs. 3,10,014/- out of the total addition of Rs. 14,96,000/- made by the assessing Officer on the basis of unaccounted cash received @ 15% on scrap sale after taking into account the prevailing practice in the business of the assessee. In view of the above stated facts and circumstances, we uphold the addition sustained in the order of the Ld. Commissioner of Income Tax(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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