TMI Blog2019 (11) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance of expenses is called for - Ground of the assessee is allowed. Disallowance u/s 36(1)(iii) - Revenue s case that assessee has diverted borrowed funds to its sister concerns and for which no interest has been charged - HELD THAT:- CIT(A) after considering the factual position has given a finding that assessee had sufficient interest free funds and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ₹ 1,60,85,130/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.24.11.2017 (in appeal No.CIT(A), Pune-3/10121/2016-17) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee and Revenue are now in appeal before us. 3. The ground raised by the assessee in ITA No.62/PUN/2018 for A.Y. 2013-14 reads as under : On the facts and in the circumstances of the case and in law, the Hon ble CIT(A) has erred in upholding the disallowance of INR 22,15,000 at an ad-hoc rate of 2% of certain expenses under section 37(1) of the Act without appreciating the same were incurred for the purpose of business. 4. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary evidence. The assessee has filed the copies of bills and vouchers. On perusing the bills and vouchers furnished by the assessee, AO noted that the expenses were not fully verifiable by bills and vouchers and few of the vouchers were not having the name and signature of the recipients. AO was therefore of the view that the probability of non-business expenses cannot be ruled out. He accordingly, on adhoc basis, disallowed 2% on aggregate expenses and thus made disallowance of ₹ 22,15,000/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO. Aggrieved by the order of Ld.CIT(A), assessee is now before us. 6. Before us, Ld.A.R. reiterated the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded to make a general statement about the expenses being not verifiable as some of the vouchers are self-made and they do not bear name and signature of the recipients. He on the basis of such surmises had concluded that the probability of the expenses for non-business purpose cannot be ruled out and accordingly, he disallowed ₹ 2% on aggregate amount on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who after considering the submissions of the assessee deleted the addition made by the AO at Para 6.3.1 of his order and while deleting the addition he has also given a finding that assessee has sufficient interest free funds to advance to its sister concerns and it is not a case of diversion of interest bearing funds to the sister concerns. Aggrieved by the order of Ld.CIT(A), Revenue is now before us. 11. Before us, Ld. D.R. supported the order of AO and Ld. A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A) and further submitted that on identical facts in A.Y. 2012-13, Revenue had carried the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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