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2018 (12) TMI 208 - AT - Income TaxDisallowance of interest expenses debited in P&L account - assessee made huge interest free advances for unrelated activities - Held that:- As regards the interest free advances given by the assessee even prior to the loan raised from the bank for acquiring vehicles and business properties, the Revenue has failed to establish any nexus between the interest bearing funds and interest free advances made to his relatives and friends. Moreover, no cogent evidence is there on the file if secured loans have not been used by the assessee for business purposes. Assessee proved to have taken the secured loans for specific purpose and their utilization has not been disputed by the AO. AO has merely made the addition on the ground that the assessee has utilized sizable amount out of the secured loans to be given as interest free advances to his family members, related concerns and for acquiring property for their personal needs. As discussed above and following the decision rendered by the coordinate Bench of the Tribunal for AY 2008-09 and 2009-10, we are of the considered view that the ld. CIT (A) has rightly deleted the addition after scrutinizing the facts - decided against revenue. Addition on account of Business Promotion Expenses - Held that:- Incurrence of expenses has not been disputed by the Revenue but they have guess-worked the personal elements in the expenses incurred by the assessee to tune of 20% by the AO and then to the tune of 5% by the ld. CIT (A). Keeping in view the facts inter alia that there is a steep increase in the current year’s business promotion expenses to the tune of 67.52% whereas increase in the gross receipt during the year under assessment is merely 25.97%, we are of the considered view that personal element in the business promotion expenses to the extent of 10% of the total expenses cannot be ruled out. So, we direct the AO to disallow 10% of the business promotion expenses of ₹ 1,97,48,988/- claimed by the assessee. Consequently, ground no.2 raised by the Revenue is partly allowed.
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