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2020 (11) TMI 692 - ITAT DELHIDisallowance of interest paid - CIT(A) had deleted the same by appreciating the fact that assessee had sufficient interest free funds - HELD THAT:- It could be safely presumed that assessee had sufficient own funds to make interest free advances to its sister concerns and to its outsiders. By placing reliance on the decision of the Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that no disallowance of interest paid by the assessee could be made in the facts of the instant case. Accordingly, the ground No.1 raised by the revenue is dismissed. Disallowance of remuneration paid to the Director u/s 40A(2) - CIT-A restricted addition at 20% as against 50% made by the ld. AO - HELD THAT:- Disallowance has been made @ 20% by the lower authorities by applying the provisions of Section 40A(2)(a) of the Act without bringing any comparable instances to drive home the point as to why the salary paid to the Director Mr. Pankaj Dayal was excessive or unreasonable. There is no finding by the lower authorities that the said Director is not competent or not technically qualified to receive such remuneration. In any case, the disallowance has been made only on an adhoc basis by the lower authorities. Since, the assessee has not preferred any appeal against the order of the ld. CIT(A) before us, we do not deem this as a fit case to interfere with the finding recorded by the ld. CIT(A). Accordingly, we direct the ld. AO to restrict the disallowance at 20% of total salary paid to the Director - Ground No.2 raised by the revenue is dismissed. Disallowance of 50% of total advertising and publicity expenses - HELD THAT:- GMR Sports Pvt. Ltd., possessed the sponsorship of IPL team of Delhi Dare Devils and this sum paid for purchase of 32 tickets in corporate tax for watching IPL matches enabled the assessee company to advertise its real estate projects by way of display boards in all the matches at Feroz Shah Kotla Cricket Stadium, New Delhi. This obviously improved the performance of the functioning of the assessee company and hence, the same would be wholly and exclusively for the purpose of business. But since the assessee has not preferred any appeal before us, against the order of the ld. CIT(A) granting relief only to the extent of 50% of the said expenditure, we do not deem it fit to interfere with the said finding of the ld. CIT(A). Accordingly, ground No.3 raised by the revenue is dismissed. Disallowance of rent expenses - CIT-A restricted addition @ 10% as against 60% done by AO - HELD THAT:- CIT(A) had given proper finding with regard to apportionment of rent not being done by the assessee to its group companies and had restricted the disallowance to 10% of the total rent paid. When a particular premises is occupied by the assessee and others (whether it is a group company or not), the rental payment and other maintenance expenses included therein are to be apportioned in a just and fair manner. When this is not done by the assessee, disallowance of expenses had to be made in the hands of the assessee. In the instant case, the ld. CIT(A) had restricted the disallowance to 10% of the total rent paid in the hands of the assessee. Ground No.4 raised by the revenue is dismissed. Disallowance of business promotion, electricity, legal and professional charges, repairs & maintenance, travelling and conveyance and miscellaneous expenses - CIT-A restricted addition to 10% as against 40% disallowed by the ld. AO - HELD THAT:- Assessee had not preferred any appeal against this order of the ld. CIT(A) before us. Since the same premises has been occupied by various concerns of the assessee, the entire expenses has to be apportioned in a just and fair manner based on the usage and the ld. CIT(A) had restricted the disallowance to 10% thereon - since no appeal has been preferred by the assessee before us against the order of ld. CIT(A), we do not deem it fit to interfere with the finding of the ld. CIT(A) especially when assessee was not categorically able to prove even before us that the subject mentioned expenditure were incurred only for the business purpose of the assessee. Hence, the disallowance restricted to 10% on adhoc basis by the ld. CIT(A) does not require any interference. Accordingly, the ground No.5 raised by the revenue is dismissed. Addition on account of disallowance with respect to cost of goods sold - HELD THAT:- CIT(A) had given a categorical finding that the ld.AO had grossly erred in rejecting the book results of the assessee without pointing out any discrepancy in the books of accounts produced before him during the course of assessment proceedings. We also find that the entire details of opening stock, purchases and project expenses and closing stock were also filed before the AO as narrated hereinabove and the same were duly reproduced in the order of the ld. CIT(A). The said facts as reproduced in the order of ld. CIT(A) has not been controverted by the ld. DR before us. The law is now very well settled that without pointing out any discrepancy in the books of accounts produced by the assessee, the ld. AO cannot reject the book results as per his whims and fancy. See POONAM RANI [2010 (5) TMI 57 - DELHI HIGH COURT] and M/S JAS JACK ELEGANCE EXPORTS. [2010 (4) TMI 84 - DELHI HIGH COURT] . No infirmity in the order of the ld. CIT(A) deleting the addition made on account of cost of goods sold - Ground No.6 raised by the revenue is dismissed.
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