TMI Blog2017 (5) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... en the same are to be added back to the total income of the assessee under section 269SS and 269T r.w.s. 40A(3) - Held that:- We find no merit in the approach adopted by the CIT(A) upholding the addition in the hands of assessee that the provisions of section 269SS and 269T of the Act are to be applied in making the aforesaid disallowance. As per the provisions of section 271D and 271E of the Act, for any default under section 269SS and 269T of the Act, penalty is leviable. However, such penalty is to be imposed by the Joint Commissioner of Income Tax. The assessment order in the present case was completed by the Assistant Commissioner of Income Tax and hence beyond his jurisdiction. In any case, disallowance is made under section 269SS and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The Assessee has raised the following grounds of appeal:- 1. The Ld.CIT(A) has erred in upholding the action of Assessing Officer in treating the expenditure of ₹ 2,81,000/- in the shape of commission/brokerage, as capital in nature. 2. In respect of the disallowance of ₹ 12,60,378/- made by the Assessing Officer u/s.269SS and 269T, the Ld.CIT(A) has erred, in observing that the transactions amounting to ₹ 12,60,378/- were in the nature of interest free loans and advances paid to the Director, and in further holding that the provisions of Section 269SS and 269T are applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d include the amount of ₹ 2,21,240/- as reflected in the current account and the amounts that have been repaid on her (assessee s) behalf by the company towards various loans in the other ledger account entitled DC . 7. That Ld.CIT(A) erred in holding that the disallowance of ₹ 16,65,055/- made by the Assessing Officer is justified. 8. The appellant prays to add, delete or amend any of the above grounds. 3. The Ld. Authorised Representative for the assessee at the outset pointed out that grounds of appeal No. 4, 5 and 6 are not pressed and hence the same are dismissed as not pressed . 4. The issue in ground of appeal No.1 raised by the assessee is against claim of deduction on account of commission/brokera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments have been made in cash then the same are to be added back to the total income of the assessee under section 269SS and 269T r.w.s. 40A(3) of the Act. The AO had disallowed the said amount on this account. The CIT(A) had upheld the addition in the hands of assessee by concluding as under : 4.1.4. . . . . . . . . . . . . . . . . . . . . . . . . . . In the present case, it is undisputed fact that the transactions were not towards the business purposes but were in the nature of interest free loan and advances paid to the director. Therefore on consideration of the entire facts and circumstances of the case, it is held that the provision of sections 269SS and 269T are squarely applicable in the present case. 8. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that it had made interest free advances for the sister concerns on which no interest was charged. However, he pointed out that no disallowance is warranted in the hands of assessee out of the finance charges and loan processing charges. The Ld. Authorised Representative for the assessee referred to the details of finance charges at page 16 of the balance sheet to point out that the assessee had sufficient own funds and reserves and surplus, to take care of the said advances and hence no merit in the said disallowance. 12. The Ld. Departmental Representative for the Revenue on the other hand placed reliance on the order of the CIT(A) with special reference to Para No.7. 13. We have heard the rival contentions and perused the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest on term loan 186,179.04 5 Interest on loan 68,000.00 6 Bad debits -- Total 1,665,055.36 14. The first plea of the assessee is that the Bank charges and loan processing charges cannot be considered for making the said disallowance and also interest on term loan, which was raised during the year under consideration and was specifically used by the assessee for its business, cannot be disallowed. 15. We find merit in the plea of the assessee in this regard and hold that no disallowance is to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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