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2016 (8) TMI 1083 - ITAT INDORE

2016 (8) TMI 1083 - ITAT INDORE - TMI - Disallowance of interest expenses - Held that:- When the assessee is paying interest on the amounts borrowed by it, the only business fund can be used on the ground of business expediency and not otherwise. The assessee is to prove the nexus that the assessee has business transactions with this party but during the course of hearing, the learned counsel for the assessee submitted that he has no business transactions with this party, therefore, the assessee .....

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im of expenses of the assessee - Decided in favour of assessee. - Disallowance of pressing expenses - Held that:- The disallowance made by the authorities below is not justified - Decided in favour of assessee. - ITA No. 118/Ind/2014 - Dated:- 25-7-2016 - Shri D.T. Garasia, Hon'ble Judicial Member For The Appellant Shri S.N. Agrawal and Shri Pankaj Mogra For The Respondent Shri Mohd. Javed ORDER This is an appeal preferred by the assessee against the order of the learned CIT(A)-II, Ind .....

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ssessing Officer that the assessee was having secured and unsecured loans. The amount was advanced to the above party free of interest. When confronted, the assessee accepted that no interest has been charged. The assessee s counsel requested that the interest @ 9% per annum should be charged on the deposit and unsecured loan during the year not exceeding 9%. The detailed working of calculation was given by the Assessing Officer in the Assessing Officer. The matter was carried to the learned CIT .....

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Bank of India in the form of cash credit limit of ₹ 63310783/-. The amount so borrowed was utilised towards the object for which the said loan was taken. The amount due from sundry debtors was ₹ 94451128 and closing stock on 31st March was ₹ 55652564/-. Therefore, the assessee has not diverted the interest bearing funds for non-business purposes. The learned counsel for the assessee submitted that when the assessee has interest free funds in his account, no disallowance of int .....

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ssessee has not used this amount for business purposes, interest is to be charged from the above party and the Assessing Officer and the learned CIT(A) are justified in disallowing the same. 6. I have heard the rival contentions. During the course of hearing, the learned counsel for the assessee was asked to provided copies of advance given to M/s K.S. Consupro India Pvt. Ltd. The assessee was directed to give evidence whether this amount was given for business expediency or not and if it is a b .....

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rposes. M/s K.S. Consupro India Pvt. Ltd. is not a sister concern of the assessee. The assessee had no business transaction with this party prior to this advance and subsequently the assessee had no business connection with M/s K.S. Consupro India Pvt. Ltd.. Moreover, the assessee did not produce any evidence to show that this advance was given for business purposes. The assessee agreed before the lower authorities and before me also that the interest may be charged @ 9% but the assessee wansted .....

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e assessee has business transactions with this party but during the course of hearing, the learned counsel for the assessee submitted that he has no business transactions with this party, therefore, the assessee was unable to prove that business funds were utilised for advancing for business purposes. During the course of hearing, the learned counsel for the assessee has cited the decision of ITAT, Indore Bench, in the case of M/s Kehems Engineering Pvt. Ltd.; ITA No. 602/Ind/2014 but in that ca .....

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stantiate its claim that the advance was given on commercial consideration. Therefore, I dismiss this ground. 7. So far as ground no. 2 relating to ad hoc disallowance to the extent of ₹ 75,000/- out of Kapas expenses is concerned, the Assessing Officer found that the assessee has shown Fb bales at ₹ 13.83 crores and cotton seed sales at ₹ 4.17 crores against which kapas expenses were debited to ₹ 19.46 lacs. The Assessing Officer on verifying these found that all the exp .....

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urers and these were for exigency of business. On the other hand, the learned DR refutted the submission of the assessee and submitted that learned CIT(A) has already granted relief to the assessee and the assessee does not deserve more than that. 9. After considering the rival submissions, I am of the view that there was no basis for the authorities below to reject the claim of expenses of the assessee. I, therefore, allow the same. 10. So far as ground no. 3 regarding ad hoc disallowance to th .....

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