TMI Blog2015 (5) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 2010. Therefore, in our opinion, the cash payment would covered by the exception under rule 6DD(j) and accordingly we set aside the order of the learned Commissioner of Income-tax (Appeals) and delete this addition. - Decided in favour of assessee. Disallowance u/s 36(1)(iii) - no interest charged on advance given to sister concern - Held that:- The Assessing Officer has fairly restricted the disallowance at ₹ 4,79,230 which was amount of interest claimed by the assessee. The proportionate disallowance is totally in consonance with the decision of the of CIT v. Abhishek Industries Ltd. [2006 (8) TMI 123 - PUNJAB AND HARYANA High Court) wherein held that the assessee will not be entitled to claim deduction of the interest on the borrowings to the extent those are diverted to sister concerns or other persons without interest, therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and confirm the same. - Decided against assessee. - ITA No. 901/Chd/2013 - - - Dated:- 12-1-2015 - SHRI BHAVNESH SAINI ANDSHRI T.R. SOOD, JJ. For the Appellant : Shri Sudhir Sehgal For the Respondent : Shri Manjit Singh ORDER T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Sh Kulwant Singh resident of village Bullepur Tehsil Khanna Distt. Ludhiana vide agreement dated December 16, 2009 for which title deed registered on dated March 30, 2010 (photocopy of the agreement dated December 16, 2009 is attached herewith) My client paid ₹ 2,00,000 (Rs. two lakhs only) in cash to the sellers on dated December 16, 2009. Through his agent Sh. Inderjit Singh resident of Khanna, ₹ 37,50,000 (rupees thirty seven lakhs fifty thousand only) in cash on agreed date i.e., March 28, 2010 as per agreement dated December 16, 2009 and ₹ 12,500 (Rs. Twelve thousand five hundred only) on dated March 29, 2010. As regards disallowance of amount under section 40A(3) on account of cash purchase of land is not applied to our case because as per clause no. (j) and clause no. (k) rule 6DD clearly state that no disallowance under sub-section (3A) of section 40A shall be made and no payment shall be deemed to be the profit and gains of the business or professions under sub-section (3A) of section 40A where the payment or aggregate of payments made to a person in a day, otherwise on account payee cheque drawn on a bank or account payee bank draft, exceed ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy it was necessary to make payment on Sunday. He also noted that as per the agreement to sell the date of registration was fixed on March 28, 2010 and the assessee was required to make payment before the Registry but the assessee had time of three months 12 days and the assessee could have made payment during that period. In this background the Assessing Officer disallowed the cash payment and made addition of ₹ 39,62,500. 5. On appeal, the submissions made before the Assessing Officer were reiterated. The learned Commissioner of Income-tax (Appeals) discussed the submissions in detail and ultimately confirmed the addition. 6. Before us learned counsel for the assessee reiterated the submissions and referred to the agreement to sell and pointed out that date of execution of the sale deed was fixed on March 28, 2010 and the assessee was required to make payment before this date. Later on, it was realised that February 28, 2010 was Sunday and in order to honour the agreement so that the assessee is able to execute the sale deed, the payment was made on March 28, 2010 which was admittedly Sunday. He further submitted that same is covered by the exception in rule 6DD(j). H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ern out of unsecured loans/maintenance deposit and from partner's capital. No interest paid on unsecured loans. During the financial year 2009-10 my client debited profit and loss account with ₹ 4,79,203 on account of interest paid to partners capital account. 10. The Assessing Officer referred to the provisions of section 36(1)(iii) and calculated the proportionate disallowance at ₹ 9,58,256. However, he noted that since claim for interest is only ₹ 4,79,230, the disallowance was restricted to this amount. 11. On appeal, disallowance was confirmed by the learned Commissioner of Income-tax (Appeals) in view of the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 (P H). 12. Both parties were heard. 13. After considering the rival submissions we find that it is an admitted fact that the assessee has diverted interest bearing funds to the sister concern, therefore, principles laid down by the hon'ble Punjab and Haryana High Court in the case of CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 (P H) would get attracted and proportionate interest had to be disallowed. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr 98,00,000 5 16,110 3-11-2009 2,00,000 Dr 1,00,00,000 63 2,07,123 5-1-2010 10,00,000 Dr 1,10,00,000 2 7233 7-1-2010 2,50,000 Dr 1,12,50,000 54 1,99,726 2-3-2010 10,00,000 Dr 1,02,50,000 2 6,740 4-3-2010 10,00,000 Dr 92,50,000 14 42,575 18-3-2010 4,00,000 ..... 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