TMI Blog2016 (6) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the authorities, but the same was not taken cognizance. The Assessing Officer and the CIT (A) proceeded on the premise that the assessee has failed to produce any evidence in support of his claim. This is not a correct position as the paper book submitted by the assessee along with the loans statement for the period 1/4/2008 to 31/3/2009 was produced before the Assessing Officer as well as CIT (A). Both the authorities failed to take cognizance of the said loan statement. It is not in dispute that the loan was taken for business purpose. The money was also advanced for business purpose. Hence the disallowance is bad in law - Decided in favour of assessee Disallowance of interest on account of not utilizing cash available in hand for business purposes and resorting to payment from bank cash credit limit - Held that:- CIT (A) has simply stated that there was no evidence produced by the assessee. We find that there is no merit in the disallowance. The said statement is incorrect. It is not for the Assessing Officer to decide how an assessee can use a cash credit limit with the Bank. - Decided in favour of assessee Addition of house hold expenses - Held that:- We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest ₹ 24,000/- for utilizing bank loan for making interest free advance whereas according to assessee the Bank Loan is utilized for business purposes. 3. Because the findings of Ld. CIT (A) are being challenged on facts and Law, for disallowance of interest ₹ 2,40,369/- on account of utilizing cash available in hand for non business purposes and hence payment made for Bank Limit whereas according to assessee the carrying conduct of the business and business affairs as a prudent businessman cannot be objected by the respondent. 4. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of ₹ 50,000/- on account of low House hold expenses. 5. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for having disallowed freight expenses of ₹ 2,35,804/- u/s 40(a)(ia) of the Act on account of TDS not deducted u/s 194C (5) of payment made to Transporters. 6. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of ₹ 3,44,530/- on account of payments exceeding ₹ 20,000/- made in cash u/s40A(3) of the Act whereas according to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. The assessee submitted that the advance was given to Deepak Mehla in the year 2007-08 for the purchase of Makki which remains outstanding till date and he was facing difficulty to recover the same. The Assessing Officer noted that no evidence about the purchase of Makki was filed. The Assessing Officer further observed that no interest on the above advance was charged although the assessee claimed expenses of ₹ 2,64,369/- by way of interest on the funds borrowed from the bank and whereas on the other hand interst free advance was made to Shri Deepak Mehla. The Assessing Officer draws the inference that the interest bearing borrowed funds were not utilized for business purposes only and a part of it was diverted for making interest free advances. Therefore, the Assessing Officer held that interest attributable to the advance of ₹ 2 lacs for the period 01.04.2008 to 31.03.2009 @ 12% per annum works out to ₹ 24,000/- and is disallowed out of interest claimed in view of Section 36(1)(ii) and also the ratio of judgment of Hon ble Punjab Haryana High Court in the case of Abhishek Industries and accordingly disallowed ₹ 24,000/-. 5. The assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually deduct tax from the owner of the truck wherever, it is applicable. The assessee further submitted that as individual truck freight was below ₹ 20,000/-, no TDS was deducted. The Assessing Officer observed that aggregate of payments exceeds ₹ 50,000/- and by not deducting tax at source, there is clear violation of Section 194C(5) of the Act and thus, total expenditure of ₹ 2,35,804 was disallowed. 8. The Assessing Officer further observed that the assessee incurred expenditure in cash exceeding ₹ 20,000/- in violation of provisions of Section 40A(3) of the Act in respect of freight expenses. Since the assessee could not give any explanation the said payments made in cash was held in violation of Section 40A(3) of the Act or exceptions provided under Rule 6DD of the Income Tax Rules. Accordingly, disallowed the expenditure to ₹ 3,44,530/-. 9. The Assessing Officer while going through the trading account filed along with the return, noticed that the assessee has shown value of closing stock at ₹ 63,63,113/-. As per Annexure I enclosed with the Audit Report, the assessee furnished quantity- wise details of closing stock along with valuati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advance. The assessee submitted that the loan was taken for business purpose and thus the interest was paid / incurred for business. The assessee submitted the relevant documents before the authorities, but the same was not taken cognizance. The Assessing Officer and the CIT (A) proceeded on the premise that the assessee has failed to produce any evidence in support of his claim. This is not a correct position as the paper book submitted by the assessee along with the loans statement for the period 1/4/2008 to 31/3/2009 was produced before the Assessing Officer as well as CIT (A). Both the authorities failed to take cognizance of the said loan statement. It is not in dispute that the loan was taken for business purpose. The money was also advanced for business purpose. Hence the disallowance is bad in law. Ground No. 2 is allowed. 13. Ground No.3 relates to disallowance of interest on account of not utilizing cash available in hand for business purposes and resorting to payment from bank cash credit limit. The CIT (A) has simply stated that there was no evidence produced by the assessee. We find that there is no merit in the disallowance. The said statement is incorrect. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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