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2022 (11) TMI 460 - ITAT PUNEDisallowance of interest expenditure on account of diversion of funds for non-business purpose - Proof of Sufficiency of interest free funds entitling diversion thereof to sister concern as such - HELD THAT:- We are mindful to the fact that, the funds borrowed on interest under “OD” facility is meant for working capital needs of the borrower & is governed by terms of loan agreement and bench is also aware of the fact that, every banker while making such a sanction invariably restricts the borrower from diverting the such loan funds or utilization thereof for any purpose outside the sanctioned tenacity by stipulating appropriate condition in the loan agreement itself. Since the appellant neither brought on the record any authorisation from the banker entitling such diversion of funds to sister concern nor placed any evidential material to substantiate such interest free payments or diversion were triggered on account of business exigencies vis-à-vis obligation and commercial expediency, consequently the claim of the appellant fails the test laid by the Hon’ble Supreme Court in “S.A. Builders Ltd. Vs CIT” [2006 (12) TMI 82 - SUPREME COURT] thus we find no infirmity with the disallowance made on this count, ergo ground number 1 stands dismissed. Repairs & maintenance expenditure - Revenue or capital expenditure - HELD THAT:- In the present case before us, it is an admitted fact that, the appellant has occupied the premises on short term lease in a disfigured condition and carried out the extensive repairs to convert the same into workshop and showroom so has to suit its business operation to be carried therefrom under a dealership specification, but without bringing into existence any capital field / asset or rights therein, except enduring usage over a short period of lease, which naturally subjected to pre-termination, consequently no control over the term of enduring usage as well. And the question as to whether or not such extensive repairs is of enduring nature is extensively dealt in the case of “Alembic Chemical Works Co.[1989 (3) TMI 5 - SUPREME COURT] For the purpose of allowability of any expenditure under the Act, what is material is the classification between the capital and revenue and the same-does not recognise of any concept of deferred revenue expenditure cataloguing with enduring benefit, hence for the reason we disapprove the contention of Ld. DR’s for treating the revenue expenditure as deferred expenditure, and are we are of the considered view that, the expenses incurred by the appellant squarely intra-legem to the provision of section 30(a)(i) of the Act, and the same finds fortified by the decision in “Cultural Enterprises Corp. Vs CIT” [1992 (1) TMI 81 - CALCUTTA HIGH COURT] ergo we remove the infirmity in the order of both the tax authorities below by deleting the disallowance carried out u/s 30(a)(i) of the Act.
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