TMI Blog2017 (9) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... n order to claim expenses which are not incurred wholly and exclusively for the purposes of business. At the most the said expenses could be capitalized. Accordingly, we affirm the order of the ld.CIT(A) on this issue.- Decided against assessee. Disallowance of interest expenditure - loan was not used wholly and exclusively for the purposes of business - Held that:- . At the time of hearing the ld. AR filed statements and contentions that the amount of loan is raised for further advancing to its director for business purposes but the same was finally returned by the Director of the company as the said loan was not used for the business purpose. The ld.AR raised the plea that since the money was received back and not used for business pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the assessee has incurred some expenses which were charged to profit and loss account and there was no reasonable relation between these expenses and business activity carried out by the assessee. In response to the show cause notice, the assessee vides latter dated 13.1.2014 submitted details. The reply filed by the assessee rejected by the AO by observing and holding as under: 5.6 If the propositions laid down in all the above cases are taken into account together, one common factor that is predominantly required to be satisfied for taking any activity as business is the motive of profit. Since there was no transaction at all during the year under consideration, therefore it cannot be said that assessee has carried on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsibility further increased because there are no corresponding business receipts. In fact the nominal business receipts shown by appellant from purchase sale of fabric also does not appear genuine as the sale bill is of earlier date than purchase bill. Under such facts and circumstances the claim of the appellant that all the expenses incurred by it were in respect of business activity are not supported by any convincing documentary evidence. It is further noted that the expenses claimed by the appellant are not routine petty expenses which are necessary for maintaining the corporate status of the appellant, but the expenses claimed are quite substantial, for example, the appellant has claimed various expenses such as depreciation on buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not incurred wholly and exclusively for the purposes of business. At the most the said expenses could be capitalized. Accordingly, we affirm the order of the ld.CIT(A) on this issue. Ground No.1 taken by the assessee is dismissed. 6. The second ground taken by the assessee is with regard to the disallowance of interest expenditure by the ld. CIT(A) as made by the AO on the ground that the loan was not used wholly and exclusively for the purposes of business. 7. Brief facts of the case are that the assessee was sanctioned a loan of ₹ 650/- lakhs from NKGSB Co.Op Bank as term loan for the purpose of expansion of business, which is used to advance to its directors Shri Raj H Shroff. According to the AO the said loan was not used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant was correctly disallowed 8. We have heard the rival contentions and perused the material placed before us including the impugned orders on the issue. At the time of hearing the ld. AR filed statements and contentions and details of amount of loan raised and further advancing the loans to its director shri R H Shroff which was finally returned by the Director of the company as the said loan was not used for the business purposes for which it was given to the directors. The ld.AR raised the plea that since the money was received back as not being used for the purpose for which it was given to the director of the company and therefore no disallowance was attracted. At this stage, we find that the statement produced befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
