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TMI Blog2021 (12) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... s Superfine Garments Pvt. Ltd. do not have creditworthiness to enter into large transaction of sale and purchase is factually incorrect - also noted that the transactions of purchases made by the assessee from its sister concern was at Arm s Length Price and no adverse finding has been brought on record by the AO and the AO has never doubted the purchases made by assessee from those associated concern. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason the interfere with the order of CIT(A) and thus the Ground of Revenue is dismissed. Disallowance u/s 37(1) - assessee had claimed interest on Government dues - interest charged by the DGFT for the period upto 10.07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER ANIL CHATURVEDI, AM: This appeal filed by the Revenue is directed against the order dated 08.05.2017 of the Commissioner of Income Tax (Appeals) I, New Delhi relating to Assessment Year 2014-15. 2. The relevant facts as culled from the material on records are as under : 3. Assessee is a company stated to be engaged in the business of manufacturing, trading and export of readymade garments. Assessee filed its return of income for A.Y. 2014-15 on 19.11.2014 declaring income of ₹ 4,04,35,560/- under the normal provision of tax and book profits of ₹ 4,01,64,390/- under MAT. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 14.12.2016 and the total taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33(6) of the Act, AO concluded that the financials of those companies did not support the worthiness of those companies to enter into the transaction of the scale entered with the assessee. He also concluded that profit of those companies did not support a huge turnover. He therefore treated the balance outstanding as on 31.03.2014 of Mangal Superfine Garments Pvt. Ltd. amounting to ₹ 6,19,38,205/- and ₹ 23,07,04,395/- of Vikas Superfine Garments Pvt. Ltd as unexplained and thus made aggregate addition of ₹ 29,26,42,600/-. 6. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), assessee made detailed submissions. CIT(A) after considering the submissions made by the assessee and for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration from different parties and out of those goods purchased it had made sale to the assessee which was as per general business practice. He has also given a finding that the allegation of the AO that M/s. Mandal Superfine Garments Pvt. Ltd. and M/s. Vikas Superfine Garments Pvt. Ltd. do not have creditworthiness to enter into large transaction of sale and purchase is factually incorrect. He has also noted that the transactions of purchases made by the assessee from its sister concern was at Arm s Length Price and no adverse finding has been brought on record by the AO and the AO has never doubted the purchases made by assessee from those associated concern. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive received as certain exports did not fall in technical textile category for which the incentives were given. He has noted that in the letter directing the assessee to refund the incentive, nowhere it was stated that assessee had committed any offence under foreign trade regulation. He thereafter relying on the decision of Hon ble Delhi High Court in the case of CIT vs. Enchante Jewellery Ltd [2013] 40 taxmann.com 216 (Delhi) held the interest expenses to be allowable expenses and directed the AO to delete the addition. Aggrieved by the order of CIT(A), Revenue is now in appeal. 13. Before us, Learned DR took us to the observations of AO and submitted that benefit was obtained on the basis of the erroneous declaration and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed and the observation of the AO about the erroneous declaration is misplaced. He submitted that DGFT has specifically stated that since assessee had deposited the entire amount without interest therefore assessee was liable to pay interest @15%. He therefore submitted that interest is compensatory in nature and not penal in nature. He thus supported the order of CIT(A). 15. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to the claim of interest expenses u/s 37 of the Act. It is the case of the Revenue that the interest paid by the assessee is penal in nature and therefore Explanation to Section 37 of the Act gets triggered and therefore the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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