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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 ..... sallowance of interest - AO disallowed the interest alleging diversion of interest free loans at 12% given to various persons - HELD THAT:- 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.- Decided in favour of the assessee Income arising to the assessee on account of the credit and debit notes issued by M/s.MMTC Ltd. - HELD THAT:- Tribunal, in it's considered view rightly deferred the proceedings under the Act to be commenced after the conclusion of the Arbitral proceedings, considering the nature of dispute between the assessee and M/s.MMT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 the assessee when the arbitration proceedings itself were caused by collusive conduct on the part of both the parties? 4). Whether on the facts and circumstances of the case, the Hon'ble Tribunal was correct in holding that repayment of a debt by a debtor will not create a fresh credit but only square off the debt, without taking cognizance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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 gold traded by assessee was of 0.995 purity and the bullion trading was different from other businesses and the assessee will not be able to share all the information with its employees and they were given information only on 'Need to know principle'. The CIT(A) considered the said contention in a elaborate manner and all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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. Therefore, a Remand Report was called and in which, the Assessing Officer clarified that only credit notes were considered. The assessee pleaded that if at all the Assessing Officer is considering adopting accounts provided by M/s.MMTC Ltd., then it should be adopted in full and the Assessing Officer cannot blow hot and col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 a great bearing on the quantum of reconciliation difference for which the assessee if at all is liable. The Tribunal opined that a addition for differences in accounting credit and debit notes, could not have been made for the impugned assessment years, as it will be crystalised only in the year in which the arbitrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 of any perversity in the approach of the Tribunal, this Court does not find any grounds to disturb the factual finding recorded by the Tribunal while confirming the finding of the CIT(A). Therefore, we hold that the said issue does not raise any Substantial Question of Law for consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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