TMI Blog2015 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... sent year and preceding year, it is seen that there is decline in both sales and purchases. It is also seen that there is decline in the expenses incurred on account of freight outward but there is increase in the expenses for freight inward to the extent of ₹ 4.17 lac as against ₹ 2.45 lac in the preceding year. The Assessing Officer has noted that the assessee could not explain the increase. These expenses are not supported by proper bills and vouchers also. Thus disallowance made by the Assessing Officer at ₹ 1,00,000/- out of freight inward expenses is reasonable and, therefore, CIT(A) was not justified in reducing the same to ₹ 50,000/-. - Decided in favour of revenue Shop repair & maintenance expense - Held that:- in the absence of any specific finding of the Assessing Officer pointing out some expenses of capital nature or non business nature, such ad hoc disallowance is not justified. The CIT(A) has also upheld the disallowance of ₹ 4,00,000/- merely on the basis that 20 times increase in repair & maintenance is not properly explained by the assessee before the Assessing Officer but we are not satisfied with this logic of CIT(A) because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t same at the beginning of the year and also at the end of the year. The Assessing Officer noted that there is no clause in the memorandum of association that the interest would be charged or paid on the negative or positive balances of the members but there is no clause in the memorandum that no interest would be charged from any member of the AOP if the member withdraw amount more than his capital balance. He further noted that it is not acceptable from any stretch of imagination that a member of AOP may withdraw any amount without paying any interest on such amounts while as per Memorandum of Association, he is expected to contribute capital for running of the liquor business. He further noted that it has also not been written anywhere in the Memorandum of Association that the AOP would bear the cost of interest on the amount withdrawn by the member of the AOP without paying any interest. The Assessing Officer computed interest on excess withdrawal made at ₹ 57,75,444/- and disallowed the same out of interest debited to profit loss account. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) who has deleted this disallowance and now, the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Bombay High Court and hence, we decline to interfere in the order of CIT(A) on this issue. Accordingly, these three grounds of the Revenue are rejected. 7. Ground No. 4 5 of the Revenue s appeal are as under: 4. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in restricting the addition on account of Freight Inward Outward at ₹ 50,000/- instead of ₹ 1,00,000/-, the addition on account of shop expenses at ₹ 1,00,000/- instead of ₹ 1,50,000/-, the addition on account of office expenses at ₹ 50,000/- instead of ₹ 75,000/- and the addition on account of shop repair and maintenance expenses at ₹ 4,00,000/- instead of ₹ 6,34,245/- without appreciating the facts brought on record by the Assessing Officer during the course of assessment proceedings. 5. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in restricting the additions on account of disallowed expenditure under the above four heads even though he accepted that such expenditure was not fully supported by bills and vouchers and even though the assessee could not produce any ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on page No. 81, we find that the sale in the preceding year was 13531.03 lacs whereas purchase was to the extent of 12776.81 lacs. From the above comparative figures of sales and purchase of the present year and preceding year, it is seen that there is decline in both sales and purchases. It is also seen that there is decline in the expenses incurred on account of freight outward but there is increase in the expenses for freight inward to the extent of ₹ 4.17 lac as against ₹ 2.45 lac in the preceding year. The Assessing Officer has noted that the assessee could not explain the increase. These expenses are not supported by proper bills and vouchers also. Under these facts, we are of the considered opinion that the disallowance made by the Assessing Officer at ₹ 1,00,000/- out of freight inward expenses is reasonable and, therefore, CIT(A) was not justified in reducing the same to ₹ 50,000/-. On this aspect, we reverse the order of CIT(A) and restore that of the Assessing Officer. 10. Regarding the second disallowance out of shop repair maintenance expenses, we find that it is noted by the Assessing Officer that the assessee has debited a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering that status of the assessee; availability of interest free funds to the assessee, no nexus between interest bearing fund and advances as well as other relevant factor. 2. That the ld. Commissioner of income tax (appeals)-II, Kanpur has erred in confirming the disallowance of ₹ 50000.00 out of freight inward outward; ₹ 100000.00 out of shop expenses; ₹ 50000.00 out of office expenses; ₹ 400000.00 out of shop repair maintenance expenses without any basis for confirming the addition. 3. That the ld. Commissioner of income tax (appeals)-II, Kanpur was correct in allowing reliefs to the assessee which decisions was considered after considering the provisions of the act. 4. That the order of ld. Commissioner of income tax (appeals)-II, Kanpur was legal and correct being based on proper appreciation of facts and provisions of law in as much as allowing relief to the assessee and deserves to be confirmed. 5. That the cross objector craves leave to modify any one or more of the grounds of appeal given above and add any new grounds of appeal, if and when need for doing so arises. 13. Regarding ground No. 1 of the Cross ..... X X X X Extracts X X X X X X X X Extracts X X X X
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