9911796707
TMI Blog2021 (8) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... ture/advances paid in question for purchase of plant and machinery by the assessee during the year under assessment was not for extension of any existing business, the same is allowable u/s 36(1)(iii) of the Act. So, the addition made by the AO and confirmed by the ld. CIT (A) is ordered to be deleted. Consequently, ground no.2 is determined in favour of the assessee. Addition on account of excessive bill discounting charges paid - assessee has failed to bring on record any documentary evidence regarding existence of any such agreement between the parties to substantiate its claim without interest - HELD THAT:- When the facts have come on record that in case of Sandhar Automotives (Dhumspur), the assessee is paying bill discounting charges from 15% to 16% but, at the same time, it is paying bill discounting charges @ 19% to Sandhar Enterprises which is reconcilable and as such, excess interest paid by the assessee to Sandhar Enterprises to the tune of ₹ 1,40,946/- has been rightly disallowed by the ld. CIT(A). So, we find no ground to interfere in the findings returned by the ld. CIT (A). Consequently, ground no.3 is determined against the assessee. Proportionate dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition of ₹ 1,42,500/- made u/s 36(1)(iii) of the Income Tax Act, 1961 which is bad in law and not called for. (Ground No-4) 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is into the business of manufacturing of Automotive Sheet Components. During the scrutiny proceedings, Assessing Officer (AO) noticed that the assessee claimed interest expenses of ₹ 1,34,78,923/- under the head interest expenses which were paid to few Non-Banking Financial Corporations (NBFC) from the banks. Interest paid to the NBFC for the year under assessment is without deducting Tax Deducted at Source (TDS). AO by invoking the provisions contained under section 194A of the Income-tax Act, 1961 (for short the Act ) disallowed an amount of ₹ 21,20,492/- u/s 40(a)(ia) of the Act and made addition thereof to the total income of the assessee. AO also made addition of ₹ 2,68,529/- on account of disallowance of interest u/s 36(1)(iii) of the Act on the ground that since the machinery is not put to use advance payment made to (i) M/s. Chi Young Machinery Co. Ltd., (ii) M/s. Sagar Scientific Works Pvt. Ltd., (iii) M/s. Phili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed original copy of prescribed certificate u/s 201 of the Act from four parties, namely, (i) Intech Capital Ltd, (ii) Magma Finance Corp. Ltd., (iii) Religare Invest Ltd., and (iv) India Bulls Finance Services Limited to the tune of ₹ 1,32,440/-, ₹ 2,35,853/-, ₹ 4,46,241 ₹ 3,25,176/- respectively totaling ₹ 11,39,710/-. 9. Ld. AR for the assessee challenging the impugned order passed by the ld. CIT (A) firstly contended that there is a factual error in the total amount of addition made by the AO u/s 40(a)(ia) of the Act as total of the amount paid to six companies, referred to in that table extracted at preceding para 7, comes to ₹ 21,04,890/- whereas as per assessment order total has been wrongly computed at ₹ 21,20,492/-. Since this is a factual error on the face of record AO is directed to provide relief of ₹ 15,602/- made on account of excess addition due to totaling error u/s 40(a)(ia) of the Act. Ld. CIT (A) provided the relief to the tune of ₹ 11,39,710/- and accordingly, net addition now under challenge comes to ₹ 9,80,782/-. 10. Ld. AR for the assessee contended that during appellate proceedings, asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in ITA No.6441/Del/2015 for AY 2011-12. 14. We have perused the order (supra) passed by the coordinate Bench of the Tribunal. Ld. DR for the Revenue merely contended that this order is of Single Bench and cannot be followed by the Division Bench. At the same time, ld. DR for the Revenue has failed to controvert the issue decided by the coordinate Bench of the Tribunal in the preceding year in assessee s own case. So, in these circumstances, when issue has been decided on the basis of relevant statutory provisions, it can be followed in the interest of justice. 15. So, following the order (supra) passed by the coordinate Bench of the Tribunal, we are of the considered view that when expenditure/advances paid in question for purchase of plant and machinery by the assessee during the year under assessment was not for extension of any existing business, the same is allowable u/s 36(1)(iii) of the Act. So, the addition made by the AO and confirmed by the ld. CIT (A) is ordered to be deleted. Consequently, ground no.2 is determined in favour of the assessee. GROUND NO.3 16. AO made an addition of ₹ 7,24,761/- on account of excessive bill discounting charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., however confirmed the addition of ₹ 1,42,500/- in respect of M/s. Anant Raj Industries Ltd. which is under challenge before the Tribunal. 19. Ld. AR for the assessee contended that identical ad hoc addition made by the AO by calculating the interest @ 12% per annum has been deleted by the coordinate Bench of the Tribunal in assessee s own case for AY 2011-12 (supra) by returning following findings:- 4. Ground number 2 is directed against the disallowance of interest computed on ad hoc basis at the rate of 14$ of ₹ 3,49,151/-. 4.1. The assessee has interest-free funds of Rs.l,59,83,901/-. The addition in question was not given during the year. The presumption is that interest-free funds were utilised for giving interest-free loans/advances, as held by the Honourable Mumbai High Court in the case of CIT vs Reliance Utilities power Ltd. reported in 313 ITR 340 (Mum). 4.2. Applying the propositions laid down by the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd.(supra) to the facts of this case we have to necessarily hold that the A.O. should presume that interest free funds have been utilized for giving ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
