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TMI Blog2012 (7) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... and the second one is sustaining of following adhoc disallowance by the CIT(A) :- (i) Power & Fuel Rs.1,00,000/- (ii) Manufacturing Expenses Rs.1,00,000/- (iii) Selling Expenses Rs.1,00,000/- 3. The brief facts of the first ground are that the assessee is a Private Limited Company engaged in the business of manufacturing and sale of Desi Ghee, Milk Powder and other milk products. During the assessment proceedings, the Assessing Officer noticed that the assessee company made investment of Rs. 13 Crore for purchase of shares of one of its sister concern M/s. Bholey Baba Dairy Industries Limited, Aligarh. The Assessing Officer asked the assessee why the provisions of section 14A should not be applied as the dividend income is exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed." 4. The Ld. Authorised Representative reiterated the submissions which were made before the CIT(A) and submitted that the assessee company holds shares of various companies. The shares of M/s Bholey Baba Dairy Industries Ltd. are held with primary intention of acquiring and retaining controlling stake therein as the primary and guiding motive of the assessee in making investment in the said shares and holding them is to retain controlling interest in the said companies. Ld. Authorised Representative submitted that the investments made in the shares were for the purpose of business and accordingly the expenses included the interest is allowable under section 36(iii) of the Act. The alternate contention of the assessee was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard the ld. Representatives of the parties and records perused. We find that the case of Assessing Officer is disallowance of interest. The interest expenses is allowable under section 36(1)(iii) of the Act. Such disallowance cannot be made in case where the assessee is having sufficient interest free funds as held by the I.T.A.T., Agra Bench in the case cited above. This view is also fortified by the judgement of Hon'ble High Court of Bombay in the case of CIT vs. Reliance Utility and poer limited, 313 ITR 340 (Bombay). In the case under consideration it is admitted fact that the assessee was having sufficient interest free funds to cover the investment made in shares of which income is exempt under section 10 of the Act. In case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer and sustained by the CIT(A) for each Assessment Year i.e. 2007-08 & 2006-07." 7. We follow the order of I.T.A.T. wherein the contention of the Ld. Departmental Representative that the own capital has been already invested in the business is not acceptable as per detailed discussions made by the I.T.A.T., Mumbai Bench in its order in the case of H.P. Shah & Co. ITA No.3694/Mum/2006 order dated 15.01.2009. Since in the case under consideration, the assessee was having sufficient own funds to make investment in shares, under the circumstances, the disallowance is not warranted. We accordingly delete the addition of Rs. 21,94,877/-. 8. The brief facts of second ground are that the Assessing Officer made the disallowance of Rs. 5,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the amount claimed, which is either not held to have paid or is held to have been paid for reasons other than business expediency, could and should be disallowed. The reason for disallowing is because either the portion disallowed is not paid or because the expenditure is not solely and exclusively for the purpose of business and not on the ground that in the opinion of the Assessing Officer the expenditure incurred by the assessee was unreasonable. It is not open to the Assessing Officer to substitute his own standard of reasonableness of the expenditure for that of the assessee. In the case under consideration, neither the Assessing Officer nor the CIT(A) found that the expenditure incurred and claimed by the assessee was not for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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