TMI Blog2018 (4) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... n supported by bills and vouchers and as to how the expenses are not admissible for deduction. The Ld. CIT(A) noted in his finding that disallowance have been made by A.O. on estimate basis only. It, therefore, appears that it is an adhoc addition in nature. Therefore, addition of ₹ 30,000/- would also not sustained. - Decided in favour of assessee. - ITA.No.6845/Del./2017 - - - Dated:- 6-4-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER For The Assessee : Shri Anil Jain, C.A. For The Revenue : Shri V.K. Jiwani, Sr.D.R. ORDER This appeal by assessee has been directed against the order of the Ld. CIT(A)-12, New Delhi, dated 14th August, 2017, for the A.Y. 2013-2014. 2. Briefly, the facts of the case are that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited several expenses for a sum of ₹ 5,88,443/- on account of business promotion, conveyance, telephone and miscellaneous expenses etc. The assessee has not fully established the same with bills and vouchers. Therefore, 10% of the same was disallowed and addition of ₹ 58,845/- was made. 4. The assessee challenged both the additions before the Ld. CIT(A). Written submissions of the assessee-firm were reproduced in the appellate order in which the assessee-firm reiterated the same facts as was made before the A.O. It was also submitted that loan from the Banks have been taken for the specific purpose of business i.e., one limit for packing credit/one limit for buyer credit (L.C.) and other limit is CC hypothecation. So, both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Learned Counsel for the Assessee also submitted that in the aforesaid judgment the principle laid down in para-10 of the order are that the principle, therefore, would be that if there are funds available both interest free and overdraft and/or loans taken, then, a presumption would arise that investments would be out of interest free fund generated or available with the Company. If the interest free funds were sufficient to meet the investments. In this case, this presumption is established considering the finding of fact both by the CIT(A) and ITAT. He has also submitted that expenses have been disallowed on adhoc basis. 7. On the other hand, Ld. D.R. relied upon the orders of the authorities below and relied upon following decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Madras High Court in the case of CIT vs. R. Mohan 2011-TIOL-687-HC-MAD-IT it was held that assessee is not entitled to claim interest expenditure on the borrowed funds which were diverted to non-business objects. 8. I have considered the rival submissions. It is not in dispute that an amount of ₹ 30 lakhs was paid to Ms. Monisha Mittal in May 2009 for a particular period for which interest has been charged. The assessee-firm claimed that since recovery of the principal amount itself was in doubt and it was not paid within the prescribed time and paid later in January, 2014, therefore, no interest was charged for the remaining period as mutually agreed between the parties. The submission of the assessee-firm have not been di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of principal amount itself was in doubt, no interest was charged for the later period. Such, contention of assessee-firm has also not been rebutted by the authorities below. Therefore, the principle decided by the Hon ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd., (supra), squarely apply in favour of the assessee that presumption would arise that loan was given out of interest free funds available with the assessee-firm. The Hon ble Supreme Court in the case of Hero Cycle (P.) Ltd., vs. CIT (Central), Ludhiana (2015) 379 ITR 347 (SC) held that assessee having credit balance in bank account at the time of advance, no disallowance of interest on borrowing should be made. The Hon ble Supreme Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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