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TMI Blog2019 (1) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... d substantial shareholding of 18% - Held that:- We find that it is undisputed fact that the assessee is not holding any beneficial shareholding in aforesaid lender and the recipient of loan is the assessee and not the beneficial shareholder. The identical issue for AY 2009-10 was contested by revenue before this Tribunal [2014 (1) TMI 1782 - ITAT MUMBAI] wherein the stand of first appellate authority was confirmed by placing reliance on the decision in Universal Medicare [2010 (3) TMI 323 - BOMBAY HIGH COURT]. During impugned AY, the CIT(A) has also followed the same judicial precedent. This being the position, we find no infirmity in the impugned order on this issue. By confirming the same, we dismiss this ground of appeal. - I.T.A. No.3923/Mum/2016 And C.O. No.01/Mum/2018 - - - Dated:- 8-1-2019 - SHRI PAWAN SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Nitesh Joshi Damodar Kabra- Ld. ARs For The Revenue : Manoj Kumar Singh - Ld.DR ORDER Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [AY] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28, Mumbai, [CIT(A)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the appellant that the interest received from associate and other concerns on temporary deployment of funds has to be netted off against interest expense for computing income from interest assessable under the head 'Income from other sources'. Your respondents submit that, on the facts and in the circumstances of their case, related interest paid on cash credit account ought to have been allowed as a deduction in computing the net income from interest assessable under the head 'Income from other sources'. The assessment for impugned AY was framed by Ld. Joint Commissioner of Income Tax-Range 12(1), Mumbai [AO] in scrutiny assessment u/s 143(3) on 25/03/2014 wherein the total income of the assessee was determined at ₹ 1051.43 Lacs after certain additions /disallowances as against returned income of ₹ 547.35 Lacs e-filed by the assessee on 28/09/2011 which was later revised to ₹ 384.36 Lacs on 31/03/2012. The assessee being resident corporate entity was stated to be engaged in the business of manufacturing trading of prestressed wires, standard wires allied products. The assessee has six units namely PW-I, PW-II, PW-II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elying upon assessment order for AY 2007-08, assessed interest income of ₹ 171.78 Lacs under the head income from other sources which reduced assessee s business profits available for claiming deduction u/s 80IB. The Ld. CIT, after appreciating the break-up of interest amount relying upon the decision of Hon ble Bombay High Court rendered in Vidyut Corporation [324 ITR 221] as well as the decision of this Tribunal in assessee s own case for 2007-08 2008-09 concluded that interest to the extent of ₹ 77.84 Lacs representing interest on temporary deployment of funds was to be treated as Income from other sources . Aggrieved, the assessee is under appeal by way of ground number-2 in the cross-objections. The Ld. AR submitted that corresponding interest expenditure should be allowed to the assessee while computing income under the head income from other sources. Our attention has been drawn to the order of the Tribunal for AY 2007-08 2009-10. After going through the same, we find that relying upon matter for AY 2007-08, the issue in AY 2009-10 has been restored to the file of Ld. AO. The relevant findings of the Tribunal could be extracted in the following man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed under the head business income or income from other sources, if it is held that the said receipts do not qualify for deduction u/s 80IB of the Act, then the exclusion for the purposes of ascertaining the income qualifying for deduction has to be the net interest income and not the gross interest receipt. In support of his contention, Ld Counsel relied on the judgment of the Hon ble Supreme Court in the case of ACG Associated Capsules P. Ltd vs. CIT (343 ITR 89). In this connection, both the parties stated that the said claim of the assessee needs to be considered in favour of the assessee in view of the binding judgment of the Hon ble Apex Court in the case of ACG Associated Capsules P. Ltd vs. CIT (supra). Accordingly, we direct the AO to apply the said judgment on considering the facts of the present case after reasonable opportunity of being heard to the assessee as per the principles of the natural justice. In substance, ground no.3 is treated as allowed in favour of the assessee. Respectfully following the above, sole ground of appeal raised by the assessee in its C.O., is restored back to file of A.O. for fresh adjudication. He is directed to afford a reasonable opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee about discrepancies noted by him before fastening tax liability to it. There can be several reasons for abnormal results and they could be perfectly valid. So, without considering the same no decision should be taken. Business world does not run as per the arithmetic rules it has many a nuances and each factor play role on taxable income of an assessee. It is not appropriate to apply mathematical formulas and determine tax liability. In the case before us, the assessee had filed a letter addressed to the State Electricity authorities informing them of malfunctioning of meter for two-three months. It is quite common feature that electricity meters in some cases do not function properly and electricity boards takes time to rectify the defects. Thus, a plausible and reasonable explanation was filed by the assessee about the discrepancy in electricity bill. Bu the AO without making any inquiry in that regard, jumped on a final conclusion. Besides even if there was no malfunctioning of the meters, there can be many a reason for mismatch in consumption of electricity and production of goods. The assessee is not manufacturing only one type of wires or not using one kind of raw mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the unit was located at different location and independently engaged in carrying out manufacturing activities and therefore it was eligible to claim the said deduction as already upheld by the Tribunal up-to AY 2008-09. Aggrieved, the revenue is in further appeal before us. 3.3 Although Ld. DR supported the stand of Ld. AO, however, nothing could be brought on record to rebut the observations made by first appellate authority and the undisputed position that emerges is that fact that the stated issue stood covered in assessee s favor in earlier years. Respectfully following the binding judicial precedents, this ground stands dismissed. 4.1 The last issue in assessee s appeal is deemed dividend u/s 2(22)(e) . It transpired that the assessee took loan of ₹ 11.46 Crores from a sister concern namely Shankarlal Gilada Sons Pvt Ltd. in which one of the partners of assessee s firm namely Sangeeta Gilada had substantial shareholding of 18%. Since the said entity had accumulated reserved of ₹ 161.87 Lacs, the loan to that extent was added to the income of the recipient assessee as deemed dividend u/s 2(22)(e). The same, upon confirmation by first appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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