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2021 (6) TMI 1024 - AT - Income TaxDisallowance of interest expenses - assessee did not collect any interest from the advances made - addition of interest on the interest free advances computed @ 14.5%, being the rate charged by SBI - HELD THAT:- Admittedly, the own funds available with the assessee as at the beginning and end of the year worth ₹ 367.92 crores and ₹ 416.53 crores respectively. The interest free advances given by the assessee is ₹ 87.30 crores as on 31.3.2013. It has been held by Hon'ble Bombay High Court in Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] that where the interest free funds far exceed the value of investments, it should be considered that investments have been made out of interest free funds. Accordingly, the interest disallowance is not called for in the present case.. Even though the A.O. has observed that the Ld. A.R. has accepted for the addition of interest expenditure, the said observation is being disputed now before us. In any case, the decision rendered by Hon'ble Bombay High Court supports the case of the assessee. - Decided in favour of assessee. Ad hoc disallowance of other expenses - AO made ad hoc disallowance of 25% of the aggregate amount of expenses - HELD THAT:- Admittedly, the assessee did not furnish evidences in support of the claim of various expenses before the A.O. As pointed out by Ld. D.R., we also notice that the additional evidences furnished by the assessee are mainly in the form of ledger account copies, self-made vouchers, etc. Hence, we are of the view that no useful purpose would be served in admitting these additional evidences and in remitting the matter to the file of the A.O. Accordingly, we decline to admit the additional evidences. However, we are of the view that the disallowance @ 25% made by the A.O. is on the higher side, since the assessee is a limited company and its accounts are being audited - the non-production of details and vouchers was also not appropriate. It is settled proposition that the onus to prove the claim would lie upon the shoulders of the assessee - disallowance of expenses may be reduced to 12.5% and the same would meet the ends of justice. Accordingly, we modify the order passed by Ld. CIT(A) on this issue and direct the A.O. to restrict the disallowance to 12.5% of the other expenses claimed by the assessee - Appeal filed by the assessee is partly allowed.
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