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2019 (5) TMI 1162 - AT - Income TaxAddition towards notional interest on loans and advances - HELD THAT:- As decided in EAST INDIA PHARMACEUTICAL WORKS LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1997 (3) TMI 5 - SUPREME COURT] it is manifest if an assessee has interest free funds as well as interest bearing funds at its disposal, then the presumption would be that investments were made from interest free funds at its disposal. Similar view has been taken by the Hon'ble Dehi High Court in CIT vs. Tin Box Company [2002 (11) TMI 75 - DELHI HIGH COURT] holding that when the capital and interest free unsecured loan with the assessee far exceeded the interest free loan advanced to the sister concern, disallowance of part of interest out of total interest paid by the assessee to the bank was not justified. As the shareholders’ fund in the instant case is far in excess of the amount of advance, we are satisfied that the disallowance made by the AO has been wrongly sustained in the first appeal to this extent. Therefore, order to delete the same. Addition towards expenses incurred through credit card - Treating such expenses as personal in nature, the AO made disallowance - CIT(A) restricted the addition to 50% - HELD THAT:- The assessee in the instant appeal is a private limited company. There is no dearth of judicial precedents holding that there cannot be any disallowance of expenses in the hands of company on account of personal use even by its directors. The Hon’ble Gujarat High Court in Sayaji Iron and Engineering Company vs. CIT [2001 (7) TMI 70 - GUJARAT HIGH COURT] has held that there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose. CIT(A) was not justified in sustaining the disallowance at 50%. The addition is deleted. Addition for foreign tour of director - personal expenses OR business expenses - AO disallowed 50% of the expenditure - HELD THAT:- Referreing to letter from Larsen and Toubro addressed to Mr. Nitish Shastri requesting him to visit the Switchgears plant in Malaysia. It is pursuant to this letter that Mr. Nitish Shastri visited Malaysia. As such, the business purpose is established and there is no reason to make any disallowance on this score. Therefore, order to delete the addition. Addition u/s.68 - HELD THAT:- In so far as the loan from Mr. Krupali Shastri is concerned, the assessee could not file any evidence to substantiate the genuineness of transaction except confirmation despite specific requisition of the AO. Neither any return of income, balance sheet, wealth tax return of Mr. Krupali Shastri was filed nor any other evidence to show the genuineness of the transaction. Similar position prevails up to the Tribunal level as well. As such, I am satisfied that the addition has been rightly confirmed. As regards the remaining amount of loan of ₹ 1.00 lakh from Mr. Sonar Subhas, it is seen that the assessee claimed to have received this amount from his employee. It is seen that the ld. CIT(A) has restored the matter to the file of the AO, for which he has no power. In the absence of the Revenue having filed any appeal against the impugned order, I cannot put the assessee to a more disadvantageous position than in which it was before the filing of the appeal before the tribunal. In the given circumstances, I approve the action of the ld. CIT(A) in restoring the matter to the AO without granting any further relief to the assessee. Addition on ad hoc basis out of certain expenses - HELD THAT:- It is observed that the AO has made the addition on ad hoc basis, without pointing out specifically as to which particular expenses were not properly vouched. In such circumstances, there can be no partial sustenance of addition on ad hoc basis. I, therefore, order to delete the remaining addition of ₹ 1.00 lakh also. This ground is allowed
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