TMI Blog2016 (7) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have charged interest even @ 6% per annum. The assessee has failed to prove any business nexus between the assessee company and Shri Manoj Kumar Jain except the fact that Shri Manoj Kumar Jain is son of the assessee So, when the assessee has failed to prove commercial expediency for advancing the interest free loan/loan at the nominal rate of interest to its subsidiary and relative, the judgments cited as S.A. Builders vs. CIT (A) [2006 (12) TMI 82 - SUPREME COURT ] , Chandigarh, CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs. Jugal Kishore Dangayach (2013 (11) TMI 1661 - RAJASTHAN HIGH COURT) relied upon by the assessee are not applicable to the facts and circumstances of the case. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law on facts of the case, in upholding an addition of ₹ 37,851/- on account of disallowance of 1/10th of expenses under the head of business promotion, travelling conveyance, vehicle maintenance, staff welfare and telephone on ad-hoc basis. 4. The Learned CIT (A) has erred both in law and on facts by not adjudicating on the ground for initiation of penalty proceedings by the Learned AO under section 271 (1)(c) of the Act on the premise that it is consequential in nature even though there was no concealment of income or furnishing of inaccurate particulars by the assessee. 2. Briefly stated the facts of this case are : pursuant to the notices under section 143 (2) and 142 (1) of the Income-tax Act, 1961 (for short the Act ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n throughout the financial year, assessee diverted interest bearing funds to Shri Manoj Kumar Jain and also received some amount as and when required and at the end of the relevant assessment year closing balance was ₹ 12,38,111/- (Dr.). As per ledger account, the assessee has not charged any interest on the funds given to Shri Manoj Kumar Jain, so the interest disallowed is calculated @ 12% per annum, amounting to ₹ 4,35,376/-. 3. In case of M/s. R.J. Fabrics, AO noticed that opening balance at ₹ 1,58,28,280/- (Dr.) as on 01.04.2011. Assessee diverted interest bearing funds to M/s. R.J. Fabrics and also received same amount as and when required and from ledger, it has come on record that the assessee was charging inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities Power Ltd. [2009] 178 Taxman 135 (Bombay) and CIT vs. Jugal Kishore Dangayach [2014] 49 taxmann.com 486 (Rajasthan) . 8. However, on the other hand, ld. DR to repel the argument advanced by the ld. AR contended that since there is no nexus between assessee company and one Shri Manoj Kumar Jain, the funds have been diverted for non-business purpose by giving interest free loan to the sister concern and relatives, the disallowance has been rightly made by the AO and relied upon the order passed by the ld. CIT (A). 9. Undisputed facts in this case are inter alia that assessee company has advanced loans of ₹ 3,28,30,957/- and ₹ 1,23,48,111/- to M/s. R.J. Fabrics, its sister concern and Shri Manoj Kumar Jain, son of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has failed to explain the rationale behind maintaining two accounts : one loan account and another sale and purchase account, which has further failed to prove the commercial expediency for diverting the funds taken at the higher rate of interest @ 18% to its subsidiary and relatives. 12. The contention of the ld. AR for the assessee that AO/CIT (A) have not brought on record that an iota of evidence that funds were diverted for personal use is not tenable because onus to prove the fact that the said funds were used for commercial expediency was on the assessee which he has failed to discharge. 13. Moreover, perusal of page no.45, which is part of the submission made by the assessee before CIT (A) during appellate proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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