TMI Blog2016 (9) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. - I.T.A. No. 1514/DEL/2015 - - - Dated:- 2-8-2016 - Shri H. S. Sidhu, Judicial Member Assessee by : Sh. Ved Jain, Adv. Sh. Ankit Jain, CA Department by : S h . A. Sreenivasa Rao, Sr. DR ORDER Per H. S. Sidhu, JM Assessee has filed this Appeal against the impugned Order dated 24.2.2014 passed by the Ld. CIT(A)-11, New Delhi relevant to assessment year 2011-12 on the following grounds:- 1. On the facts and circumstances of the case, the order passed by the Ld. CIT(A) is bad, both in the ye of law and on the facts. 2 (i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of ₹ 1,41,991/- made by AO by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng income of ₹ 16,22,870/- on 14.9.2011 which was later selected for scrutiny. Accordingly, the AO issued notices u/s. 143(2) o the Income Tax Act, 1961 (hereinafter referred as the Act). During the year assessee was engaged in the business of trading in yarn and BOPP and manufacturing and trading of cloth. Apart from business income, income from salary, short term capital gain and income from other source was also declared by the assessee during the year under consideration. The AO s observation was that assessee debited a sum of ₹ 4,91,293/- in the profit and loss account under the head interest on unsecured loans (Rs. 632306/-) on bank loans (Rs. 383713), other interest (Rs. 475274). The assessee had also made substantial inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, assessee has filed the Appeal before the Tribunal. 5. At the time of hearing, Ld. Counsel of the assessee with regard to disallowance made u/s. 14A has stated that as per the balance sheet it is evident that own funds held by the assessee were more than the investment made and accordingly no disallowance under section 14A can be made. To support his contention, he relied upon the following case laws and stated that the issue in dispute is squarely covered by the said decisions. - CIT vs. Taikisha Engineering Ltd. (Delhi High Court) ITA No. 115/2014 119/2014 dated 25.11.2014. - CIT, Mumbai Versus HDFC Bank Ltd. (Bombay High Court) ITA No. 330 of 2012 dated 23.7.2014. - CIT vs. Suzlon Energy Ltd. (Gujarat High Court) (2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be deleted and the Appeal of the Assessee may be allowed. 6. On the other hand, Ld. DR relied upon the orders of the authorities below and stated that since the assessee has diverted its funds for nonbusiness purposes saying that idle funds were utilized for earning income and on the other side and he is incurring interest expenses and claiming the same as business expenses, hence, the disallowance of ₹ 1,41,991/- was rightly made and needs to be affirmed. Ld. DR further stated on the disallowance of ₹ 1,50,763/ on account of various expenses, the assessee has not furnished any evidence to prove that these expenses were incurred wholly and exclusively for the purpose of business. He further stated that therefore, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der clause (ii) to Rule 80(2) of the Rules, the AO is required to examine whether the assessee has incurred expenditure by way of interest in the previous year and secondly whether the interest paid was directly attributable to particular income or receipt - the amount to be disallowed as expenditure relatable to exempt income, under sub Rule (2) is the aggregate of the amount under clause (i), clause (ii) and clause (iii) - Clause (i) relates to direct expenditure relating to income forming part of the total income and under clause (iii) an amount equal to 0.5% of the average amount of value of investment, appearing in the balance sheet on the first day and the last day of the assessee has to be disallowed - thus, the order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any basis. Evidently, the AO has not pointed out any particular voucher or expenditure, which was unrelated to the business of the assessee. There is no instance noticed by the AO, which showed that the expenditure was incurred for personal purpose. Moreover, the accounts of the assessee, as noted by us earlier, are statutorily required to be audited and have been so done. There is also no adverse observation by the auditors in this regard. The disallowance, therefore, was made by the AO on mere surmises and conjectures. Therefore, the CIT(A) appropriately deleted the addition. We hereby affirm the order of the CIT(A) and, therefore, the Revenue fails on this ground. 8.1 In the background of the aforesaid discussions and respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X
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