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2019 (11) TMI 979 - AT - Income TaxDisallowance of ad-hoc rate of 2% of certain expenses u/s 37(1) - HELD THAT:- It is an undisputed fact that the assessee had furnished the requisite documents before the AO and produced the books of accounts. AO has proceeded to make a general statement about the expenses being not verifiable as some of the vouchers are self-made and they do not bear name and signature of the recipients. He on the basis of such surmises had concluded that the probability of the expenses for non-business purpose cannot be ruled out and accordingly, he disallowed ₹ 2% on aggregate amount on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance of expenses is called for - Ground of the assessee is allowed. Disallowance u/s 36(1)(iii) - Revenue’s case that assessee has diverted borrowed funds to its sister concerns and for which no interest has been charged - HELD THAT:- CIT(A) after considering the factual position has given a finding that assessee had sufficient interest free funds and it was not the case of diversion of funds to its sister concerns. To arrive at the aforesaid conclusion, Ld.CIT(A) also relied on the submissions of the assessee in the case of Reliance Utilities [2019 (1) TMI 757 - SUPREME COURT] . Before us, no fallacy in the findings of Ld.CIT(A) has been pointed out. We therefore find no reason to interfere with the order of Ld.CIT(A). Thus, the grounds of Revenue are dismissed.
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