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TMI Blog2013 (11) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Y. 2006-07 on 29.12.2006 declaring total income of Rs. 51,30,120/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 22.12.2008 and the total income was determined at Rs. 1,06,30,840/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 31.03.2010 granted partial relief to the assessee. Aggrieved by the aforesaid order of CIT(A), Assessee is now in appeal before us and the effective ground reads as under: 1. Disallowance on account of shortage / rate difference restricted to the extent of Rs. 50,000/- by the learned CIT(A) may kindly be deleted. 2. Addition on account of interest of Rs. 19,87,843/- computed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Assessing Officer. I find that the disallowance has been made on an adhoc basis by the A.O. Similar disallowances were made in the earlier assessment years also and I find that my predecessors have restricted a very nominal amount out of such disallowances made. It is also seen that the order of my predecessors for the A.Y. 1998-99 and 1999-00 is confirmed by the ITAT. I, therefore, restrict the disallowance to an amount of Rs.50,000/-. The assessee gets a relief of Rs.9,63,891/-. 5. Aggrieved by the order of CIT(A), the Assessee is now in appeal before us. 6. Before us, the learned A.R. submitted that the Assessee is engaged in the business of transportation of chemicals and there is bound to be shortage in this type of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the opening balance of Shri Hasmukhlal Shah, the Assessee has paid Rs. 19,68,938/- as interest calculated @ 12%. He further noticed that sundry debtors includes Rs. 1,49,33,686/- from Shri Hasmukhlal Shah who was the brother of Assessee and the Assessee has not charged any interest. He also noticed that there were other debtors who were close relatives of the Assessee from whom also the Assessee has not charged any interest. The Assessee was asked to explain as to why interest at 12% should not be charged at Rs. 1,65,65,363/-. The assesse interalia submitted that he was having capital of Rs. 2.1 Crore on which no interest paid. The submissions made by the Assessee was not found acceptable to the Assessing Officer. He noticed that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 686/- whereas the balance was to other persons from whom interest has been charged except for Shri H.M. Shah and Shri Ranchdbhai Patel. The former is an employee of the assessee stationed at Bharuch and the amount was advanced for business purpose and therefore no interest was charged while an interest free loan of Rs.50,000 was received from Shri Kiritbhai Patel and the same was advanced to the latter and therefore no interest has been charged on this too. The Id. A.R. however, was unable to submit the business expediency and necessity of such advances given to Shri Hasmukhbhai Shah totalling Rs.1,49,33,686/-. 5.3 I have considered the submissions of the Id. A.R. and the facts of the case and find that the assessee has no explanation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1,65,65,363.00 11. He further submitted that no interest was chargeable from A.M. Shah as he is an employee stationed at Bhrauch and the amount of debt represents advance given for the purpose of carrying on business dealings. He further submitted that from Sarojben Shah interest @ 12% has already been charged and reflected in the accounts. He placed on record the copy of ledger account of Sarojben Shah at page 160 of the paper book. Similarly with respect to Shah Finance and Investment, he submitted that the Assessee has already charged interest at 12%. He further submitted that the Assessing Officer has considered the total outstanding balance for charging interest but has not granted credit for the interest which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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