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2021 (4) TMI 168 - AT - Income TaxDisallowance u/s 37(1) - interest free loan to its Managing Partner - assessee claims that the MD has used it for assessee's business purposes only - HELD THAT:- As assessee relied upon case GOPIKRISHNA MURALIDHAR [1961 (11) TMI 68 - ANDHRA PRADESH HIGH COURT] which is not applicable to the facts of the case before me, as in the said case, it was undisputed that the assessee therein had borrowed the money from HUF for the business of the family and had not borrowed for the purpose of household expenses. It was held that the family was entitled to withdraw from the capital supplied by it, with the result of the capital being depleted. In the case before me, it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. This contention is not acceptable. The assessee has, in fact claimed it as spent for its business purposes only. Further, the amount spent on construction of shed is not available on record. Therefore,we are not inclined to accept this contention of the assessee and therefore, the disallowance u/s. 37(1) of the Act is upheld. As regards the administrative expenses, we also feel that the disallowance of 10% of the expenses under the respective head is quite excessive. Therefore, restrict the disallowance to 5% of the expenses under the relevant heads. Assessee's appeal is partly allowed.
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