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2015 (7) TMI 761 - AT - Income TaxDisallowance of proportionate interest on the funds diverted for non-business purpose - CIT(Appeals) restricted part disallowance - Held that:- What is to be disallowed is in respect of the expenditure which was not incurred for the purpose of business. If the assessee made advance from the funds available with him, then there is no question of disallowance. The availability of funds to the extent of ₹ 15,27,009/- including the current year’s profit of ₹ 3,85,910/- is not in dispute. The opening balance as on 1.4.2006 was ₹ 11,40,100/-. Therefore, the CIT(Appeals) found that to the extent of ₹ 11,40,100/-, there is no question of making any disallowance. In respect of the remaining portion, the CIT(Appeals) found that the interest has to be charged only at 11.5% when the assessee is paying interest at 11.5% on the borrowed funds. This Tribunal is of the considered opinion that the interest has to be considered only at 11.5% and not at 16%. Therefore, the CIT(Appeals) has rightly restricted at ₹ 62,315/-. This Tribunal do not find any infirmity in the order of the CIT(Appeals) and accordingly, the is confirmed. - Decided against revenue. Unexplained cash credit - CIT(A) deleted addition - Held that:- Assessing Officer added ₹ 50,000/- which was claimed to have been received from M/s Khanna Brothers and M/s Khanna & Co. The assessee claims that the advances were made to him. However, the cheque was issued in the name of M/s Spectrum Maruthi Spares. The fact remains that there was a transfer of funds from M/s Khanna Brothers and M/s Khanna & Co. to M/s Spectrum Maruthi Spares where the assessee is a partner. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. This Tribunal do not find any infirmity in the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue. Now coming to the addition of ₹ 2,00,000/- said to have been received from Smt. T. Rajalakshmi, it is not in dispute that the assessee has received the funds through account payee demand draft. The only contention of the Ld. D.R. is that the details were produced before the CIT(Appeals). However, he has not taken any specific ground with regard to violation of Rule 46A. The fact remains that the Assessing Officer made an addition of ₹ 2,00,000/- and the CIT(Appeals) found that the payment was made through DD and therefore, there is no question of any addition. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue. Disallowance of incurred for renovation of hotel - CIT(A) deleted addition - Held that:- It is not in dispute that the Tribunal has fixed unaccounted sales at ₹ 28,00,369/- in the case of M/s Spectrum Maruthi Spares. If that is true, the assessee is entitled for ₹ 14,00,185/-. Therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue.
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