TMI Blog2014 (1) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the investment made with M/s Gian Residency Pvt. Ltd. upheld - Decided against Assessee. Disallowance of interest u/s 40(a)(ia) of the Act – Failure to deposit TDS – Deduction of TDS paid on unsecured loans - Held that:- The decision in CIT Vs. Sikander Khan N.Tunvar & Others [2013 (5) TMI 457 - GUJARAT HIGH COURT] followed - where the assessee has failed to deduct the tax at source and deposit the same within the specified period, the expenditure relatable to such deduction of tax at source would not be allowed as deduction, while computing the income of the assessee - the assessee was liable to deduct tax at source in respect of the interest paid to NBFCs and also interest paid on unsecured loans – the contention of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, Ld. CIT (A) has grossly erred in confirming disallowance of Rs.1,26,000/- u/s 36(l)(iii) of the Act by holding that decision of Honorable Punjab Haryana High Court in the case of Abhishek Industries is explicitly applicable to the advances made to Sh. Avinash Kapoor. Conclusion drawn by Ld. CIT (A) is illegal and bad in law. 2. That on the facts and circumstances of the case, Ld. CIT (A) has grossly erred in confirming addition of Rs.32,90,840/- being notional interest @14% on amount invested in share capital of M/s. Gian Residency Pvt. Ltd. Addition confirmed is illegal and bad in law. 3. a) That on the facts and circumstances of the case, Ld. CIT (A) has grossly erred in confirming addition of Rs.12,84,325/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, Ld. CIT(A) has grossly erred in confirming disallowance of 1/10th of vehicle and telephone expenses as against disallowance made by Ld.A.O. at 1/8th of vehicle and telephone expenses. Disallowance confirmed is illegal and bad in law. 3. The issue in ground Nos. 1 2 raised by the assessee is against the disallowance u/s 36(1)(iii) of the Act. 4. The brief facts of the case are that during the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed interest expenditure on borrowed funds and on the other hand, had made interest free advances to the sister concern on which no interest was charged. The Assessing Officer, in view of the ratio laid down by the Hon'ble Punjab Haryana H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year was Rs.54,02,883/-. However, the assessee has also made interest free advances to different parties, on which no interest was being charged and one such advance was to Mr.Avinash Kapoor with whom admittedly there was no commercial transactions. The Ld. AR for the assessee admitted that the said advance was not for commercial purposes. In view of the ratio laid down by the Hon'ble Punjab Haryana High Court in CIT V Abhishek Industries (supra) we find no merit in the plea of the assessee and disallowance u/s 36(1)(iii) of the Act in relation to the advance to Shri Avinash Kapoor at Rs.1,26,000/- is upheld. Ground No. 1 raised by the assessee is thus dismissed. 8. The assessee has further made an investment of Rs.2.35 crores i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in share capital of M/s Gian Residency Pvt. Ltd. The Ground No. 2 raised by the assessee is, thus dismissed. 10. The issue in Ground Nos. 3 4 raised by the assessee is against the disallowance of interest by invoking the provisions of section 40(a)(ia) of the Act. Admittedly, the assessee had failed to deduct tax at source and deposit the same within the stipulated period and in view thereof, the interest paid to NBFCs totaling to Rs.12,84,325/- and Rs.150,671/- on unsecured loans was disallowed by the Assessing Officer, in view of the provisions of section 40(a)(ia) of the Act. The said disallowance was confirmed by the CIT(Appeals). 11. The plea of the ld. AR before us was that the said disallowance and the disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was liable to deduct tax at source in respect of the interest paid to NBFCs totaling Rs.12,84,325/- and also interest paid on unsecured loans totaling Rs.150,671/-. We uphold the orders of the authorities below in this regard. We do not find any merit in the alternate plea raised by the ld. AR for the assessee that the disallowance of notional interest u/s 36(1)(ii) of the Act and the disallowance of interest in view of section 40(a)(ia) of the Act results in double addition. The total interest expenditure claimed by the assessee was Rs.54 lacs, as against which addition u/s 36(1)(iii) of the Act has been made to the extent of Rs.34 lacs. The balance disallowance has been made by invoking the provisions of section 40(a)(ia) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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