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TMI Blog2017 (12) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of interest Rs.13,67,455/-. iii. Ad hoc disallowance on : a. Carriage inward charges Rs.1,00,000/-. b. Packing Material Rs.1,25,000/-. c. Printing & Stationery Rs.50,000/- d. Travelling Expenses Rs.50,000/-. e. Expenses on Car & Telephone, etc. Rs.91,500/- Total Rs.4,16,500/- Aggrieved by the assessment order dated 22-12-2010, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the additions made by Assessing Officer on account of Bad Debts written off and disallowance of interest payment. In respect of ad hoc disallowance on various items the Commissioner of Income Tax (Appeals) restricted the disallowance to Rs. 2,00,000/-. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals) in confirming the additions. 3. Shri V.L. Jain appearing on behalf of the assessee submitted that he would not be pressing ground No. 1 raised in the appeal in respect of grievance against non-granting of proper opportunity of hearing by the Assessing Officer. 3.1 As regards other grounds of appeal, the ld. AR r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to Nagpal Landmarks and Positive Life Style Developers Pvt. Ltd. were out of commercial expediency. The amount advanced to Nagpal Landmarks was on account of investment. As far as amount advanced to Positive Life Style Developers Pvt. Ltd. is concerned the assessee had sufficient own funds to cover such advances, therefore, in view of the decision of Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities & Power Ltd. reported as 313 ITR 340, no disallowance is called for. As regards advances made to Prakash C. Gidwani, Naresh C. Gidwani and Madhav K. Gidwani are concerned they are the employees of assessee. No disallowance is to be made on amounts advanced to employees. 3.3 In respect of ground No. 4 the ld. AR submitted that the Assessing Officer made ad hoc disallowance of Rs. 4,16,500/- without there being any material to show that the assessee has not incurred the expenditure for business purpose. In first appeal, the Commissioner of Income Tax (Appeals) restricted the disallowance to Rs. 2,00,000/-. The Commissioner of Income Tax (Appeals) again made disallowance purely on estimations without there being any evidence indicating tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led disallowance of Rs. 41,44,485/- on account of Bad Debts written off. The case of assessee is that the assessee had advanced sum to the tune of Rs. 64,68,034/- over the period of time to Jashnani Leasing & Finance Ltd. for purchase of shares. The contention of the assessee is that the assessee wanted to trade in shares. However, the authorities below after analyzing the documents on record and facts of the case came to the conclusion that in the earlier assessment years the assessee had made investments in shares and had offered the gain arising on sale of shares as Capital Gain. The fact that in the earlier assessment years the assessee had offered the profits from sale of shares as Short Term Capital Gain has not been disputed by the assessee. As per the contentions of the ld. AR the assessee was having running account with Jashnani Leasing & Finance Ltd. and thus, the assessee over the period of time had advanced Rs. 64,68,034/- to Jashnani Leasing & Finance Ltd. for purchase of shares. It is a well settled law that the assessee can maintain two separate portfolios, one relating to investments and other relating to trading in shares. However, there has to be clear distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - As regards amount advanced to Nagpal Landmarks, the contention of assessee is that the amount has been advanced for investment purpose, therefore, no disallowance on the ground of diversion of funds for nonbusiness purpose is called for. We do not find any merit in the submissions made on behalf of assessee. Except for bald assertions the assessee has not placed on record any documentary evidence, whatsoever to show that advance to Nagpal Landmarks was in the form of investment against property. In so far as advance to Positive Life Style Developers Pvt. Ltd. is concerned, the contentions of the assessee is that advance was given out of own interest free funds on account of commercial expediency. The advance given to Positive Life Style Developers Pvt. Ltd. is to the tune of Rs. 43,75,000/- as against the assessee‟s balance in Capital Account Rs. 65,00,000/-. The Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities & Power Ltd. (supra) has held that where both interest free funds and interest bearing funds are available and the interest free funds are more than the investment made, the presumption is that the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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