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2015 (3) TMI 228 - ITAT AGRADisallowance of interest - Held that:- addition is wholly unjustified. The balance sheet of the assessee P.B.37 shows that assessee has capital of ₹ 56,37,092/- and apart from the same the assessee has also sufficient liquidity in the form of sundry creditor of ₹ 1,20,83,648/- on which no interest was payable and was also available for investment, sundry debtors and other assets. if there were funds available both interest free and overdraft/loans taken, then the presumption would arise that investments would be out of interest free funds generated or available with the company, if the interest free funds was sufficient to meet the investments. In this case, this presumption was established considering the finding of fact both by the learned CIT(A) and the Tribunal. Interests were deductable all these decisions support the case of the assessee. The A.O. has not proved any nexus between the borrowed funds and interest free loans given - it is clear that assessee has sufficient capital, profit and interest free funds available with him for the purpose of giving interest free loans to the above person. Therefore, proportionate disallowance of interest is wholly unjustified. Disallowance in respect of depreciation and vehicle expenses for personal use - A.O. disallowed 1/5th of these expenses for personal user of the car - CIT(A) restricted the same to 1/8th of the expenditure - Held that:- personal user of the car cannot be ruled out being the assessee individual, however, the disallowance is reduced to 1/10th of the total claim. Disallowance of telephone travelling staff welfare, sales promotion and Diwali expenses - Held that:- According to A.O., these expenses are not fully supported by the vouchers and mostly vouchers have been produced, therefore, expenses were not subject to verification. 1/5th of the expenses were disallowed which were modified and reduced by the learned CIT(A) to 1/8th of the expenditure. Considering the explanation of the parties, we find that the addition is justified on this issue, however, the addition is reduced to 1/10th of the total claim - Decided partly in favour of assesse.
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