Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 1093 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - the amount of capital work in progress and advance given for purchase of machinery - interest bearing funds attribution - Held that:- We agree with the assessee that no interest bearing funds can be attributed to have been used for the purpose of making impugned investment in capital work-in-progress and advance for purchase of machinery. The Revenue,we find, has not pointed out any nexus between the interest bearing funds of the assessee and the investment in the same and the disallowance has been made by giving a vague/ general statement that the funds have been found to have been advanced for the purchase of capital asset without specifying whether /which interest bearing funds have been so used. In the absence of the same and considering the totality of the facts and circumstances of the present case, we hold that no disallowance of interest is warranted in the present case as per the provisions of section 36(1)(iii) of the Act. The disallowance so made therefore, directed to be deleted. - Decided in favour of assessee. Disallowance of expenses u/s 14A - assessee had contended that the investment had been made out of sale of mutual funds held in the preceding year - Held that:- As demonstrated through the schedule of investment forming part of the balance sheet showing none of the old investments of ₹ 8.5 crores appearing in the investments of the current year which show new investments of ₹ 2.60 crores. Thus we find that the assessee had clearly demonstrated the attribution of the source of the investment in the mutual funds to be out of non interest bearing sources. There was no occasion at all to invoke the provisions of section 14A and made disallowance of interest under the same. The disallowance, therefore, made is directed to be deleted. - Decided in favour of assessee. Disallowance of expenses for purchase of diesel u/s 40A(3) - payment made in cash exceeding the specified limit - Held that:- in the present case the assessee has filed evidence to establish the genuineness of the expenditure and also the business expediency for making the payment in cash, by filing copies of accounts of both the parties one from whom diesel was purchased in regular course and the other in urgent situations only making payment to him in cash on demand. The Revenue has not controverted the said facts. Therefore the genuineness of the expenditure and also the business expediency for making the payment in cash stands established - no disallowance u/s 40A(3) was warranted ,merely for the reason that the assessee's situation did not fall in that listed in Rule 6DD of the Income Tax Rules,1962. - decided in favour of assessee. Disallowance of foreign travelling expenses - allowable busniss expenditure u/s 37(1) - Held that:- he fact that the travelling was undertaken by the directors of the assessee company was established by the assessee filing details and copy of account of travelling expenses. The revenue has not controverted the said fact. Further the fact that the assessee has made considerable export sales in the immediately succeeding years of ₹ 32 lacs and ₹ 1.42 crores has also remained uncontroverted. Therefore there is no reason for attributing any personal/non business usage in the said expenses when the entire travel has been undertaken by the directors of the company resulting in visible increase in sales in the succeeding year. The disallowance upheld by the CIT(A) to the extent of ₹ 87,000/- is purely adhoc without any basis - decided in favour of assessee.
|