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TMI Blog2020 (10) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration (AYs' 2006-07 to 2012-13). These appeals can be segregated into three categories based on the Substantial Questions of Law which have been framed for consideration. The following are the four Substantial Questions of Law have to be decided in these appeals: 1).Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee quoting lower rates for cash sales as against 'sales to jewellers' is tenable, even though both are not credit sales? 2)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that disallowance of interest is not warranted where the assessee had sufficient own funds, without appreciating that the diverted own funds had it remained with the assessee would have reduced its interest burden? 3)Whether on the facts and circumstances of the case, the Appellate Tribunal was correct in deciding that until the arbitration proceedings between the assessee and M/s.MMTC Ltd., (Minerals and Metals Trading Corporation Ltd.,) reach a finality, additions cannot be made on the credit notes raised by M/s.MMTC Ltd., in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )-19, Chennai [CIT(A)]. The appeals were Partly Allowed and the above four issues were decided in favour of the assessee vide order dated 28.03.2017. 5. The assessee contended before the CIT(A) that the books relied on by the Assessing Officer for making the additions were the very same books which were produced by the assessee before the Assessing Officer during the course of original assessment and there was no incriminating material found at the time of search and the recomputation of profit was made by the Assessing Officer purely on surmises. Further the assessee submitted that they were not following the Association Rate for selling bullions but were following LMB (London Bullion Metal Exchange) with adjustments for exchange rate difference, import duty etc and sales effected to jewelers were based on cheques received from them. It will take couple of days for collection. Whereas across the counter cash sales resulted in immediate realization of money and therefore, such transactions were incorporated by the assessee by offering slightly lower rates for cash sales. Further more the assessee contended that LMP rates noted in the diary was for 0.999 purity gold, whereas the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee was held to be vague and without proper details and accordingly, the Assessing Officer made disallowance of interest free advances and loans at 12%. On appeal, the CIT(A) found that the assessee had substantial capital built over various years and was also having substantial interest free advances and there was nothing on record to show that any interest bearing funds were diverted for giving any interest free loans or for making any investments. The finding rendered by the CIT(A) was decided for its correctness and the Tribunal confirmed the same after taking note of the observations made by the CIT(A), who had analyzed the total investments and interest free advances given for the assessment years 2006-07 to 2012-13 as well as the total of interest free advances received by the assessee for all the assessment years and confirmed the finding. 8. With regard to the third issue, the Assessing Officer brought the income arising to the assessee on account of the credit and debit notes issued by M/s.MMTC Ltd., The assessee was on appeal before the CIT(A) contenting that the Assessing Officer cannot take note of the credit notes, ignoring the existence of debit notes. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of Memorandum of Agreement dated 02.04.2008 between the assessee and M/s.MMTC Ltd., and the Claim Petition filed by the assessee before the Arbitrator was directed to be treated as counter claim. The said order dated 20.11.2011 was to supersede the arbitration proceedings in Clause no.11 of the Memorandum of Agreement dated 02.04.2008. 10. The Hon'ble Supreme Court also fixed a time frame for the parties to exchange documents. On a Miscellaneous Petition moved by M/s.MMTC Ltd., in M.A.No.941 of 2020 in C.A.NO.11148 of 2017, the Hon'ble Supreme Court by order dated 02.06.2020, extended the time limit for the Arbitral proceedings by twelve months and the time to start from the date when the Hon'ble Arbitrator resumes the proceedings. Though the order passed in the Miscellaneous Petition is only on 02.06.2020, we have mentioned about this in this judgment to demonstrate that the dispute between the assessee and M/s.MMTC Ltd., is pending before the Hon'ble Arbitrator. The Tribunal took note of the order dated 20.11.2017, passed in Crl.O.P.NO.21243/2014 and Crl.R.C.No.1191/2015 and in our opinion, rightly, held that the outcome of arbitration proceedings will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the assessee which was initially a Proprietorship concern had been taken over by the assessee from August 2011 and the assessee has explained the credit entry and accepting the explanation, the CIT(A) held that there is no reason for making any addition of amount which was a credit entry squaring off a earlier debit entry. 13. The Revenue was on appeal before the Tribunal on the said issue and after considering the manner in which the CIT(A) dealt with the issue, the Tribunal also verified the facts and noted that the transaction amounts received from Smt.Pista Bai were repayment of earlier advances of Rs. 30,00,000/- given by the assessee, when the business was run as a Proprietorship concern and the latter transactions were reflected in the accounts of the Proprietorship concern. Thus it was held to be only a repayment of debt by a Debtor. Once the business was taken over by the assessee Company, any repayment of debt by a Debtor will not create a further credit, it will square off the debit. Therefore, the Tribunal found that there was no reason for interfering with the order passed by the CIT(A). 14. We find that the issue is fully factual and in the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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