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TMI Blog2004 (12) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 - MADRAS HIGH COURT] . As far as the issue of expansion is concerned, the prospectus shows that issuing fresh share capital was for the purpose of setting up of two new units and expansion of existing business at Kadi and Motibhoyan, which was given to the AO. Thus, we are of the view that amount received by the assessee had relation with delay caused in execution of contract of construction and supply of plant and machinery as discussed, capital receipt. Accordingly, this ground is allowed. Purchase expenses - It is pertinent to mention here that in case of M.K. Bros. [ 1985 (10) TMI 15 - GUJARAT HIGH COURT] also investigation was initiated on the basis of action of the ST authorities. Apart from this, assessee (sic-AO) has not taken into consideration the returned goods because purchase from M/s Sai Baba Sales Corporation has been made of Rs. 1,16,20,690, while only purchase of Rs. 83,90,690 was debited. The AO has not taken into consideration the return purchases. So, the Revenue has not justified its stand to falsify the transactions. Thus, we do not concur with the findings of CIT(A) and the addition in question is directed to be deleted. Allowability of interest and financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or asst. yr. 2000-01. Since the assessee is the same and some of the issues involved in these appeals are interlinked, these appeals were heard together and are being disposed of by this common order for the sake of convenience. ITA No. 1481/Ahd/2004 for asst. yr. 2000-01 (assessee's appeal): 2. The assessee has raised the following grounds in its appeal: 1. The learned CIT(A) has erred in law and on facts in confirming the addition of interest of Rs. 3,27,90,125 and further erred in not allowing the set off of the said interest income from the pre-operative expenses capitalized. 2. The learned CIT(A) has erred in law and on facts in confirming the disallowance of purchase expenses of Rs. 83,90,690 out of total purchases have been alleged bogus purchases. 3. The learned CIT(A) has erred in law and on facts in confirming the disallowance of Rs. 44,52,805 of provisions for bad debts. 4. The learned CIT(A) has erred in law and on facts in confirming the disallowance of Rs. 32,02,200 out of the interest expenses on the ground that loans and advances have been given for alleged non-business purpose without charging any interest. 5. The learned CIT(A) has erred in law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Motibhoyan, district Mehsana, Gujarat. The assessee-company was asked to give details of pre-operative income and expenditure. As per details submitted along with letter dt. 11th March, 2003, it has been observed by the AO that the total interest income amounting to Rs. 4,99,20,337 has been reduced from the pre-operative expenses account. Out of this, income of Rs. 1,71,30,212 has been shown as "other income", but the balance sum of Rs. 3,27,90,125 has not been shown as income. The same issue was involved in asst. yr. 1998-99, wherein it had been held that the interest earned by the assessee is taxable under the head 'Income from other sources', even if it is earned during the pre-operative period and is required to be added to the total income of the assessee-company. The AO relied on the decision of the Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC), wherein the Supreme Court held that interest so earned is income from other sources and is, therefore, liable to be taxed. Following the same, the AO held that the pre-operative income of Rs. 3,27,90,125 is income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of its assets and these were receipts of a capital nature and could not be taxed as income. In the case cited above, it was held by the Supreme Court that interest earned by the assessee on advance given by it for the purpose as discussed, does not represent the independent source nor an investment made for earning income but was charged by way of damages which is clearly adjusted against final bill of each of the parties. The CIT(A) considered the facts of the case and submissions made by the learned counsel for the assessee. The CIT(A) observed that the interest earned by the assessee on advances given by it for the purpose as discussed does not represent the independent source nor an investment made for earning income, but was charged by way of damages which is clearly adjusted against final bill of each of the parties. At the same time, the decision as relied on by the AO in the assessment order in the case of Tuticorin Alkali Chemicals & Fertilizers cannot be applied to the instant case, because the interest earned in that case was income from other sources and before the commencement of its business. The decision as relied on by the assessee in the case of Bokaro Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2000, and remaining 3 machines in the month of June, 2000. The party has not delivered machines in time, hence, the assessee had charged interest to the said party. So far as Vimpsan Precision Private Ltd., the assessee had ordered to the party for various capital goods like dyes and moulds of various dia, captooling and utilities for various machineries. The assessee-company had also granted advances to the party for the same purpose. Due to several reasons, the company had not taken delivery of goods as party is not able to deliver it in time, hence, the assessee has charged interest to the party. The assessee has taken delivery of goods in the years 2000-01 and 2001-02. The assessee has also adjusted these interests in balance amount payable to the party after advances. As regards Suraksha Petrochemicals (P) Ltd., the assessee-company had given capital contract to the party for supply of various capital goods, the party could not respond in time and hence the assessee had charged interest of Rs. 65,02,500. Similar is the position in respect of other advances given to the parties for supply of capital goods. The last two parties mentioned at p. 227A of the paper book were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing at pp. 227 and 227A of the paper book. The AO neither disputed the information furnished above nor called for any further information. Therefore, the basic information of the said claim was before AO. However, the assessee had not again given elaborate explanation before AO as the AO did not raise any query, presumably because he accepted the correctness put up before him. Arguments before the CIT(A) put forward by assessee are only the arguments to elaborate the basis of assessee's claim and no fresh evidence before CIT(A) was given for the first time. In the present case, the assessee was concerned about expansion of the existing business and no new business was to be set up at Ambaliyara in Gujarat and at Pondicherry. The two projects at these places were set up for manufacturing the same items which were produced at the units at Kadi and Motibhoyan. Therefore, the ratio laid down in the decision of the Hon'ble Supreme Court in the case of Bokaro Steel Ltd. is squarely applicable. The Supreme Court has further considered this issue in the case of CIT vs. Karnataka Power Corporation (2000) 162 CTR (SC) 249 : (2001) 247 ITR 268 (SC) which was considered in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertilizers Ltd. and the assessee has relied on the decision of Hon'ble Supreme Court in the case of Bokaro Steel Ltd. Actually, both the decisions were for the period prior to commencement of the business. In assessee's case it is actually expansion of business. The assessee was concerned with expansion of existing business and no new business was to be set up at Ambaliyara in Gujarat and Pondicherry. These two projects at these two places were to be set up for manufacturing the same items which were produced at the units at Kadi and Motibhoyan in Gujarat. The Hon'ble Supreme Court in the case of Bokaro Steel Ltd. has held that where money was borrowed by company which was in process of construction and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalized and added to the cost of the fixed assets created as a result of such expenditure. By same reasoning, if the assessee receives any amounts which are intricately linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of capital nature and cannot be taxed. Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in execution of contract of construction and supply of plant and machinery as discussed above and is capital receipt. Accordingly, this ground is allowed. 4. The second ground of the appeal is regarding confirmation of disallowance of purchase expenses of Rs. 83,90,690 out of total purchases. This issue has been discussed vide paras 6 to 11 at pp. 2 and 3 of the assessment order and the CIT(A) has dealt this issue vide paras 5.1 to 5.4 at pp. 6 to 9 of the appellate order. Before the AO, the assessee submitted that total purchases from M/s Sai Baba Sales Corporation have been made of Rs. 1,16,20,690 against which there were purchase and return bogus purchase returns of Rs. 32,30,000, thereby net purchase debited in the account amounts to Rs. 83,90,690. Further, it was submitted that the payments were made by account payee cheques and truck numbers have been mentioned. Therefore, the purchases themselves suggest that these cannot be said bogus purchases. The AO, considering the submissions of assessee, observed that as per specific information received vide letter dt. 28th March, 2003, from the Dy. Commr. of Sales-tax (Enforcement), the Sai Baba Sales Corporation is a bogus ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re cheque payment is not sufficient. Assessee never demanded examination or cross-examination of any party. No evidence for supply of material and consumption of material was given. Quantity tally is not available. Therefore, consumption of bogus purchase cannot be presumed. There should be 100 per cent disallowance in view of Tribunal, Ahmedabad, decision in the case of Swetamber Steel Ltd. The decision of Gujarat High Court in the case reported at (1986) 52 CTR (Guj) 228 : (1987) 163 ITR 249 (Guj) is distinguishable and it does not help the assessee. Quantitative details of raw material and finished goods, i.e., input and output do not tally. Hence, the disallowance towards bogus purchases is required to be continued. 4.3 After considering the rival submissions and going through the material on record, we find that the AO has mainly relied upon the letter dt. 28th March, 2003, received from the ST authorities. The AO has not examined Mr. Deepak K. Gujjar nor the assessee was given any opportunity of cross-examination of Shri Deepak K. Gujjar. The tax audit report filed in the paper book, particularly p. 33 at Item 9(c), wherein auditors have certified that list of books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court, wherein the issue was decided in favour of assessee. It is pertinent to mention here that in case of M.K. Bros. also investigation was initiated on the basis of action of the ST authorities. Apart from this, assessee (sic-AO) has not taken into consideration the returned goods because purchase from M/s Sai Baba Sales Corporation has been made of Rs. 1,16,20,690, while only purchase of Rs. 83,90,690 was debited. The AO has not taken into consideration the return purchases. So, the Revenue has not justified its stand to falsify the transactions. Taking all the facts of the case including the case law relied on by the parties into consideration, and in view of the above discussion, we do not concur with the findings of CIT(A) and the addition in question is directed to be deleted. 5. Ground No. 3 is in regard to disallowance against provisions for bad debt of Rs. 44,52,805. The learned counsel for the assessee fairly conceded that this being provision made, is not pressed. Accordingly, ground No. 3 of assessee's appeal is dismissed as not pressed. 6. Ground No. 4 is regarding confirmation of disallowance of Rs. 32,02,200 out of interest expenses on the ground that loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the same as per law after providing reasonable opportunity of hearing to the assessee. 7. Ground No. 5 is regarding confirmation of disallowance of Rs. 9,94,421 claimed under s. 35D of the Act. The AO observed that the expenditure which could be claimed under s. 35D of the Act has been specifically listed out in s. 35D(2)(c)(iii) of the Act and hence the impugned expenditure was not allowable as deduction. Matter was carried in appeal before appellate authority wherein the learned counsel for assessee submitted that total expenses incurred for public issue under s. 35D of the Act expenditure incurred was amounting to Rs. 10,63,81,582. The assessee gave break-up of the public issue expenses. The assessee also submitted that the allowability of expenditure has to be considered with reference to the provisions of s. 37 of the Act first and thereafter if the expenditure is found to be in nature of capital expenditure, it should be required to be amortised under s. 35D of the Act. The CIT(A) confirmed the disallowance in question. 7.1 Before us, the learned counsel for the assessee reiterated the submissions made before the authorities below and opposed their orders. The learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered with reference to the provisions of s. 37 of the Act first and thereafter if expenditure is found to be capital expenditure, it should be required to be amortised under s. 35D of the Act. This issue needs deep probe in the light of above legal discussion. So, in the interest of justice, we. restore this issue also to the file of AO with the direction to decide same as per law after providing reasonable opportunity of hearing to the assessee. 8. Ground Nos. 6, 7 and 8 are regarding additional ground being financial charges, professional charges and upfront fees, and the same have not been allowed as revenue expenditure. During the appellate proceedings, the assessee has raised the additional grounds vide its submission dt. 17th July, 2003, which are as under: "The learned AO grossly erred in law in accepting the appellant's claim relating to capitalization of interest and incidental charges as per the details set out hereinafter, contrary to Expln. 8 to s. 43(1) of the Act, as also in the binding decision of the Hon'ble Gujarat High Court in the case of Dy. CIT vs. Core Healthcare Ltd. (2001) 169 CTR (Guj) 416 : (2001) 251 ITR 61 (Guj). He ought not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in the case of Core Healthcare Ltd.. The assessee-company had an existing unit manufacturing glass at Baroda. For establishing a new glass manufacturing unit at Bangalore, the company incurred certain expenditure in the relevant year and the production of the new unit did not take place. The assessee has also relied on the judgment of Hon'ble Supreme Court in the case of India Cement Ltd. vs. CIT (1966) 60 ITR 52 (SC), wherein the issue of allowing interest as revenue expenditure is decided. It had further relied on the judgment of Bombay High Court in the case of Calico Dyeing & Printing Works vs. CIT (1958) 34 ITR 265 (Bom). Apart from this, the assessee also relied on various other decisions. The CIT(A) vide paras 13.2 and 13.3 at pp. 16 to 18 of his appellate order has observed as under: "13.2 I have carefully analysed all the decisions of various High Courts and Hon'ble Supreme Court as relied upon by the AO as well as the appellant. First of all, I take up the issue of admitting the additional ground raised by the appellant. The appellant has relied upon the three judgments of the Supreme Court, viz., Jute Corpn. of India Ltd. vs. CIT & Anr. (1990) 88 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings and these details are containing Annexs. 5, 6 and 7. Out of the above, I intend to allow only interest expenses of Rs. 2,92,45,670 in view of the Gujarat High Court's decision in the case of Core Healthcare. The balance charges of Rs. 45,58,678, being financial charges, legal and professional charges of Rs. 64,75,000 and upfront fees of Rs. 80,84,352 are not considered as revenue expenses. In this regard, the AO is directed to look into the correctness of the interest charges from the Annex. 5 as given by the appellant and accordingly if it is found arithmetically correct, allow the same as revenue expenses in view of the decision of Hon'ble High Court mentioned supra. I agree with the contention of the appellant that the amendment to s. 36(1)(iii) is w.e.f. 1st April, 2004, which has been introduced by the Finance Act, 2003, which is reproduced as under: 'Provided that any amount of the interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books or account or not) for any period beginning from the date on which the capital was borrowed for acquisition of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Healthcare Ltd., Challapalli Sugars Ltd. vs. CIT, CIT vs. Alembic Glass Industries Ltd., Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT, National Organic Chemical Industries Ltd. vs. CIT (1993) 115 CTR (Bom) 434 : (1993) 203 ITR 410 (Bom), Sutlej Cotton Mills Ltd. vs. CIT 1978 CTR (SC) 155 : (1979) 116 ITR 1 (SC), CIT vs. India Discount Co. Ltd. (1970) 75 ITR 191 (SC), CIT vs. Chunilal V. Mehta & Sons (P) Ltd. 1973 CTR (SC) 470 : (1971) 82 ITR 54 (SC), CIT vs. Associated Fibre & Rubber Industries (P) Ltd. (1999) 152 CTR (SC) 21 : (1999) 236 ITR 471 (SC) and State of Madras vs. G.J. Coelho (1964) 53 ITR 186 (SC). The learned counsel for the assessee contended that these are allowable expenditures as these expenses are incurred on borrowings made for the existing business and assessee had borrowed money for expansion of existing units, and hence these are covered by the decision of Hon'ble Supreme Court in the case of India Cements Ltd. vs. CIT. Those expenses were incurred towards the fund borrowed for the purposes of business. Upfront, but one-time processing loss @ 1.5 per cent, so these amounts being revenue in nature are covered in favour of assessee by the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... layer film plant from Relfenhausher from Germany, LC commission charges for import of Tube Mahine from AISA Automation from Switzerland have been shown in Annex. 5 at p. 272 of the paper book. Stamp paper and other charges for purchase of land at Ambaliyara, from Vivro Financial Services (P) Ltd., for project report for Ambaliyara, stamp papers, other charges for purchase of land at Pondicherry, and stamp duty for land at Ambaliyara have been shown at Annex. 6 at p. 273 of the paper book. The learned counsel for the assessee submitted that all these charges/fees are eligible deduction under s. 37(1) of the Act. The learned counsel for the assessee submitted that CIT(A) has called for report from AO on additional ground regarding deduction of interest. All these details have been shown at pp. 228 to 231 of the paper book. It would be seen that all these details are regarding new business and as such the said payments are not supported by any evidence. On the contrary, as mentioned earlier, the payment is pertaining to expansion of existing business and as such the same is eligible for deduction. The principle laid down by Hon'ble Gujarat High Court the in CIT vs. Alembic Glass I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into directly to facilitate the business of the company and was made on ground of commercial expediency. Upfront fee is also related to loan for expansion of the business. In the facts and circumstances of the case, financial charges, legal and professional charges and upfront fees are allowable expenditure. AO is directed accordingly. 9. Ground Nos. 9 and 10 are in regard to confirmation of action of AO in not properly calculating deduction under s. 80-IA of the Act. On verification of P&L a/c, the AO found that the profit of the Motibhoyan unit includes income under the head 'Other income' amounting to Rs. 6,86,96,685 and, therefore, he observed that deduction under s. 80-IA is only admissible on the profit derived from the industrial undertaking. By relying upon the decision of Hon'ble Supreme Court in the case of Sterling Foods vs. CIT (1991) 95 CTR (Kar) 36 : (1991) 190 ITR 275 (Kar), wherein it has been held that the import of word "derived" is much smaller than the phrase "attributable to", as also the case of Madras High Court in the case of CIT vs. Pandian Chemicals Ltd. (1998) 147 CTR (Mad) 5 : (1998) 233 ITR 497 (Mad), wherein it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the first appellate authority wherein it was submitted that the entire income in respect of interest earned amounting to Rs. 5,91,30,485 has clear nexus with interest paid by the assessee and, therefore, benefit of netting off must be granted. The CIT(A) observed that computation made by AO is in order and the stand of assessee is not acceptable since it has been held by many Benches of the Tribunal that 90 per cent interest is to be excluded from the income from business or profession for computation of deduction under s. 80HHC. The CIT(A) did not accept the contentions of the assessee. 10.1 After considering the rival submissions and going through the material on record, we are not inclined to interfere with the findings of CIT(A) who has observed as under: "After carefully considering the observation of the AO as well as the submissions by the appellant along with the judicial decisions, I am of the view that the computation made by the AO under s. 80HHC is in order and the stand of the appellant is not acceptable, since it has been held by many benches of the Tribunal that 90 per cent of the interest is to be excluded from the income from business or profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal ground but the learned Departmental Representative opposed the submissions of the learned counsel for the assessee. Both the learned Representatives relied on various case law in support of their contentions. After going through the rival submissions and on perusal of the material on record, we find that at pp. 4 and 5 of the paper book, copy of the return filed for assessment year in question has been placed. As per page No. 5, the assessee has clearly offered the interest on share application money of Rs. 1,71,30,212 as income from other sources. At p. 34 of the paper book which is part of tax audit report, wherein it has been stated in reply to question No. 13D that Rs.1,71,30,212 was interest on F.D. created out of share application money. As per p. 6 of the compilation No. 2 which is reply dt. 11th March, 2003, to query by AO in course of assessment proceedings whereby break-up of interest received on F.D. created out of share application money was given to AO. Thus, assessee has made out a case that all relevant material was on record and, therefore, in view of various decisions, the additional ground may be admitted. Regarding legal position, we find that r. 11 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. Similarly, Hon'ble Bombay High Court in CIT vs. Govindram Bros. (P) Ltd. (1982) 26 CTR (Bom) 262 : (1983) 141 ITR 626 (Bom) has held that additional ground could be allowed to be raised before the Tribunal and the Tribunal is competent to give necessary direction to carry forward of losses. Hon'ble Madras High Court in CWT vs. S.S. Sankaralingam (2001) 167 CTR (Mad) 137 : (2000) 245 ITR 640 (Mad) has decided a similar issue wherein claim was not made before ITO and AAC. The question was raised for the first time before the Tribunal wherein it was held that Tribunal had jurisdiction to entertain claim for exemption under s. 5(1)(xxxi) made by assessee for the first time before it and decide such issue. In view of above discussion, we are of the view that additional ground may be admitted. We direct accordingly. 12.2 On merit, the stand of assessee was that keeping the share money in F.D. in bank pending allocation is statutory requirement and has to be complied. The assessee relied on the decisions of the Tribunal in the cases of Neha Proteins Ltd. vs. Asstt. CIT (2004) 83 TTJ (Jd) 236 and J.M. Shares & Stock Brokers Ltd. vs. Dy. CIT (2004) 83 TTJ (Mumbai) 1052, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive opposed the same. The contention of learned Departmental Representative is that the above decision was rendered in context of pre-amended law as legal position changed after 1st April, 1999, with introduction of s. 145(1) and according to the Revenue, the closing stock has to be valued inclusive of customs duty. In rebuttal, the stand of assessee is that the assessee has included the value of customs duty as provided under s. 145A in the value of closing stock. But in the additional ground raised, the assessee wants relief on account of applicability of s. 43B. In the facts and circumstances of the case, we are of the considered opinion that in view of the decision in Berger Paints, the entire amount of excise duty/customs duty paid by the assessee in particular accounting year is allowable under s. 43B of the Act as deduction in respect of that year, irrespective of the amount of excise duty/customs duty included in value of assessee's closing stock at the end of accounting year as related thereto. So, in the interest of Justice, we restore this issue to the file of AO for deciding the same as per law available at relevant point of time on the issue relevant to the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue is covered by the decision of Hon'ble Supreme Court in the case of India Cement Ltd.. The learned counsel for the assessee has also relied on the following decisions: (i) J.K. Synthetice Ltd. vs. ITO (1990) 36 TTJ (Del) 563 (ii) 50 TTJ (Del) 271 (sic) (iii) Sona Steering Systems Ltd. vs. Dy. CIT (2003) 78 TTJ (Del) 213 So, according to the learned counsel for the assessee, there is no need to interfere. 13.2 We have considered the rival submissions and gone through the material on record. We find that in CIT vs. East India Hotel Ltd. (2001) 171 CTR (Cal) 614 : (2001) 252 ITR 860 (Cal), issue of debenture expenses was involved and the loan was repayable within eleven years of allotment of debenture. The expenditure was held to be revenue in nature. The Board has clarified that provisions of amortization are not intended to supersede any other provisions of IT Act under which it is admissible as deduction or deduction allowable by virtue of the decision of Hon'ble Supreme Court in India Cement Ltd.. In view of this discussion, we are not inclined to interfere with the findings of CIT(A) and the same are upheld. 14. The second ground of Revenue's appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erfere. 15.1 We have considered the rival submissions and gone through the material on record. We are of the view that this issue is also covered by the ratio laid down in the decision of Hon'ble Supreme Court in the case of India Cement. The finding of CIT(A) on the issue is also upheld. 16. The fourth ground of the Revenue's appeal is regarding deletion of disallowance of interest expenses to the extent of Rs. 14,48,879 being 2 per cent of interest income charged less by the assessee. The learned Departmental Representative supported the findings of AO in the assessment order on this issue. On the other hand, the learned counsel for the assessee asserted that the assessee has rightly recovered the interest @ 16 per cent from Babubhai Patel & Co., as against the interest charged by AO @ 18 per cent. The AO is not justified in charging 2 per cent interest more. The CIT(A) has discussed this issue vide para 7 of his appellate order, relevant portion of which is as under: "7. The sixth ground of appeal relates to disallowance of Rs. 1,17,97,468 out of interest expenses. The interest expenses of Rs. 1,17,97,468 consist of two parts, first, interest charged from Babubh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NTC, i.e., Shri Rama Association is left out without charging the interest. The appellant could not adopt different yardsticks for different parties. I, therefore, confirm the stand taken by the AO and the disallowance of interest expenses to the extent of Rs. 32,02,200 is confirmed." The learned counsel for the assessee submitted that there is no reason to interfere with the findings of learned CIT(A). The same be upheld. 16.1 After considering the rival submissions and going through the material on record, we find force in the submissions of the learned Authorised Representative. We find that the CIT(A) has observed-- "This issue has already been covered while disposing of ground No. 3. The only difference is of rate of interest. The appellant has charged @ 16 per cent whereas the AO has charged @ 18 per cent and according to the calculation of the AO the interest is computed at Rs. 85,95,268. The AO is directed to delete the disallowance in respect of interest of Babubhai Patel & Co., as this has already been charged and it is included in the interest of Rs. 3,27,90,125 as discussed while disposing of ground No. 3." In our opinion, there is no infirmity in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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