TMI Blog2016 (1) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed on the basis that the investments were made out of interest bearing funds. The addition made by the Id. AO is not sustainable on the facts and in law and therefore the addition made be deleted. - I.T.A. No. 602/Ind/2014 - - - Dated:- 5-1-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER. Appellants by : Shri R.R. Meena, DR Respondent by : Shri Manoj Phadnis, CA ORDER: PER D. T. GARASIA, J.M. This appeal by the Revenue is directed against the order of CIT(A)-I, Indore, for the assessment year 2010-11. 2. The grounds raised by the Revenue in this appeal are as under :- On the facts and in the circumstances of the case the ld. CIT(A) (i) erred in deleting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition of ₹ 2,00,000/- on account of the assessee s failure to produce corroborative evidence and to establish that the expenses were identical to business, without appreciating that the assessee was duly bound to produce/establish the same, which it has failed despite consuming adequate opportunities. 3. Ground no. 1 relates to the addition of ₹ 39,91,541/- on account of disallowance u/s 36(1)(iii) of the Income-tax Act, 1961. 4. The brief facts of the case are that the assessee filed the return of income for the assessment year 2010-11 through Efiling vide acknowledgement number 157622771220910 declaring total income of ₹ 28,31,680/-. During the assessment proceedings, the ld. AO has made certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the business of the company. The deposit of ₹ 485 lacs outstanding as at 31st March 2010 is not financed from the borrowed money but is from the share capital raised by the company in the year 1995. On the basis of the clear facts as mentioned above, the interest paid by the company cannot be considered as being in any way attributable towards the interest free deposit given by the company. The aggregate of the share capital and free reserves of the company are as under:- Particulars 31.03.2 010 31.03.2009 Share Capital 5,49,76,300.00 5,49,76,300.00 Reserves and Surplus 2,34,36,064.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free fund for making the advances to its sister concern and the advances made in the year 1995. The submission of the assessee was considered but the same was not acceptable as the company have both types of fund i.e. interest free as well interest bearing during the year under consideration. He further mentioned that the assessee company was incorporated in October,1994 and the assessee company had given advances in March,1995, as such at that time the company could have only its share capital as interest free funds. He further observed that the paid up share capital of the company even at the end of the year under consideration was ₹ 5,49,76,300/-. He further observed that the amount of paid up capital of the company at the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unsecured Loans from Promoters 1,34,36,221 Total 6,19,75,410 Interest free Deposits 6,10,00,000 The ld. AO has failed to follow the direct decision of Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Limited, (2009) 313 ITR 340, wherein it is held that where the assessee possessed sufficient interest free funds of its own which were generated in the course of the relevant financial year, part from substantial shareholders funds, presumption sands established that the investment in sister concerns were made by the assessee out of interest-free funds and therefore no part of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. DR could not point out anything contrary to the finding of the ld. CIT(A). We uphold the action of the ld. CIT(A). Ground no. 1 of the Revenue is dismissed. Ground no. 2 : 10. Ground no. 2 relates to the addition of ₹ 2,00,000/- made on account of disallowance of certain expenses. 11. The AO made further lump sum disallowance of ₹ 2,00,000/- in the expenses claimed by the assessee on the ground that certain expenses were not properly vouched and open to verification. He further mentioned in the order that for availing the claim of any expenditure u/s 37, the onus was on the assessee to establish that the expenditure was exclusively incurred for the purpose of business activity. Mere production of vouchers and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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