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2015 (7) TMI 761 - ITAT CHENNAI

2015 (7) TMI 761 - ITAT CHENNAI - TMI - Disallowance of proportionate interest on the funds diverted for non-business purpose - CIT(Appeals) restricted part disallowance - Held that:- What is to be disallowed is in respect of the expenditure which was not incurred for the purpose of business. If the assessee made advance from the funds available with him, then there is no question of disallowance. The availability of funds to the extent of ₹ 15,27,009/- including the current year’s profit .....

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% and not at 16%. Therefore, the CIT(Appeals) has rightly restricted at ₹ 62,315/-. This Tribunal do not find any infirmity in the order of the CIT(Appeals) and accordingly, the is confirmed. - Decided against revenue.

Unexplained cash credit - CIT(A) deleted addition - Held that:- Assessing Officer added ₹ 50,000/- which was claimed to have been received from M/s Khanna Brothers and M/s Khanna & Co. The assessee claims that the advances were made to him. However, the cheq .....

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e addition of ₹ 2,00,000/- said to have been received from Smt. T. Rajalakshmi, it is not in dispute that the assessee has received the funds through account payee demand draft. The only contention of the Ld. D.R. is that the details were produced before the CIT(Appeals). However, he has not taken any specific ground with regard to violation of Rule 46A. The fact remains that the Assessing Officer made an addition of ₹ 2,00,000/- and the CIT(Appeals) found that the payment was made t .....

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essee is entitled for ₹ 14,00,185/-. Therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue. - ITA No.1147/Mds/2012,C.O. No.118/Mds/2012 - Dated:- 3-7-2015 - Shri N.R.S. Ganesan and Shri A. Mohan Alankamony, JJ. For the Petitioner : Sh. P. Radhakrishnan, JCIT For the Respondent : Sh.V. Jagadisan, FCA ORDER PER N.R.S. G .....

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first issue arises for consideration is with regard to disallowance of proportionate interest on the funds diverted for non-business purpose. The Ld. D.R. submitted that the Assessing Officer found that the assessee has diverted the borrowed funds for non-business purpose by making interest-free deposits to various persons. According to the Ld. D.R., the interest payment was calculated @ 16% in respect of the funds which were diverted. The CIT(Appeals), however, restricted the disallowance to & .....

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ficer. 3. On the contrary, Shri V. Jagadisan, the Ld. representative for the assessee, submitted that the assessee had interest-free capital to the extent of ₹ 15,27,009/- for the assessment year 2007-08. The opening balance as on 1.04.2006 is ₹ 11,40,100/-. Therefore, the interest-free fund available for making advance is to the extent of ₹ 11,40,100/-. This amount of ₹ 11,40,100/- was confirmed by the CIT(Appeals) as advanced from capital balance. The CIT(Appeals) restr .....

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disallowed is in respect of the expenditure which was not incurred for the purpose of business. If the assessee made advance from the funds available with him, then there is no question of disallowance. The availability of funds to the extent of ₹ 15,27,009/- including the current year s profit of ₹ 3,85,910/- is not in dispute. The opening balance as on 1.4.2006 was ₹ 11,40,100/-. Therefore, the CIT(Appeals) found that to the extent of ₹ 11,40,100/-, there is no question .....

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5. The next issue is with regard to unexplained cash credit to the extent of ₹ 2,50,000/-. 6. Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the Assessing Officer found that the assessee has received a sum of Rs.25,000/- from M/s Khanna Brothers and another sum of ₹ 25,000/- from M/s Khanna & Co. However, M/s Khanna Brothers and M/s Khanna & Co. informed the Assessing Officer that they gave funds only to M/s Spectrum Maruthi Spares and not to the as .....

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s received from one Smt. T. Ramalakshmi by account payee demand draft. On the examination, the Assessing Officer found that the explanation of the assessee that he received ₹ 2,00,000/- from Smt. T. Ramalakshmi is not tenable. The CIT(Appeals), however, found that the loan was received by way of account payee demand draft, hence, it is a verifiable transaction. Accordingly, he deleted the same. The Ld. D.R. submitted that the details of account payee demand draft were not produced before t .....

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ver, this cheque was issued in the name of M/s Spectrum Maruthi Spares. The assessee being one of the partners of the firm, the CIT(Appeals) found that the genuineness of the receipt was established, therefore, he deleted the addition. According to the Ld. representative, when M/s Khanna Brothers and M/s Khanna & Co. admitted that they paid ₹ 25,000/- each to M/s Spectrum Maruthi Spares, where the assessee is a partner, there is no reason to make any further addition. Referring to the .....

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ved from M/s Khanna Brothers and M/s Khanna & Co. The assessee claims that the advances were made to him. However, the cheque was issued in the name of M/s Spectrum Maruthi Spares. The fact remains that there was a transfer of funds from M/s Khanna Brothers and M/s Khanna & Co. to M/s Spectrum Maruthi Spares where the assessee is a partner. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. This Tribunal do not find any infirmity .....

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er made an addition of ₹ 2,00,000/- and the CIT(Appeals) found that the payment was made through DD and therefore, there is no question of any addition. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. 10. Now coming to the addition of ₹ 8,50,000/-, the Ld. D.R. submitted that the assessee has not admitted in the return of income the expenditure of ₹ 8,50,000/-, which was said .....

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