TMI Blog2015 (12) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we uphold the order of the ld CIT(A). - Decided against revenue - ITA No. 87/JP/2013 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI, JM SHRI T.R. MEENA, AM For The Revenue : Shri D.C. Sharma (Addl.CIT) For The Assessee : Shri P.C. Parwal (C.A.) ORDER PER: BENCH This is an appeal filed by the revenue against the order dated 19/11/2012 passed by the learned CIT (A)-I, Jaipur for A.Y. 2008-09. The sole ground of appeal is against deleting the addition of ₹ 11,43,263/- made by the Assessing Officer as the assessee firm has diverted the interest bearing funds to one of its partner Shri Deepak Khanna for non business purposes. 2. The assessee firm is engaged in the business of manufacturing and export of hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of appropriation of company s funds. To contention that in totality in a credit balance in partner s capital account was not convinced as each partner is a separate legal entity. Cumulative balance has not evidence in the eyes of law. If this fund was might have available with the firm, the firm might have paid less interest and debited less expenses. He further relied on the following case laws:- (i) CIT Vs. H.R. Sugar Factory (P) Ltd. 187 ITR 363 (Alld). (ii) CIT Vs. Abhishek Industries Ltd. 286 ITR 1 (2006) P H. (iii) Indian Metals Ferro Alloys Ltd. Vs. CIT 193 ITR 344. By following the above decisions, the ld Assessing Officer worked out the disallowance at ₹ 11,43,263/-. 3. Being aggrieved by the order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by his judicial pronouncement. In view of the above discussions and the facts of the case, the disallowance of interest of ₹ 11,43,263/- is deleted. 4. Now the Revenue is in appeal before us. The learned D.R. has supported the order of the Assessing Officer. 5. At the outset, the learned AR for the assessee has submitted that the interest on capital to the partners is governed by the provisions in the partnership deed. As per partnership deed, the firm has to allow interest @ 12% on credit balance of the partners subject to change in the rate of interest from time to time but the firm neither paying interest on credit of the capital account and charging interest on debit of the partner s account since inception. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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