9911796707
TMI Blog2020 (11) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer made additions/disallowances on following counts:- S.No. Nature of expenditure Disallowances 1. Job work charges (testing of meters) Rs. 8,10,320/- 2. Disallowance of interest u/s. 36(1)(iii) of the Act Rs. 80,71,229/- 3. Vehicle running & maintenance expenses Rs. 5,70,459/- 4. Business promotion expenses Rs. 6,40,911/- Total Rs. 1,01,12,919/- Aggrieved by the assessment order dated 29/12/2017 passed under section 143 (3) of the Income Tax Act, 1961 (in short 'the Act'), the assessee filed appeal before the CIT(A). The CIT(A) confirmed the additions in full in respect of job work charges and disallowance of interest under section 36(1)(iii) of the Act. However, in respect of other two expenditure i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed, accordingly. 5. In ground No.2 of the appeal, the assessee has assailed disallowance of claim of deduction Rs. 80,71,229/- under section 36(1)(iii) of the Act. The Assessing Officer observed that the assessee has made borrowings of Rs. 14.21 crores during the period relevant to the assessment year under appeal and has paid interest of Rs. 1.57 cores @ 11.05%. The assessee had advanced short term loans of Rs. 6.88 crores without charging interest. The short term loans have been advanced from borrowed funds. The assessee has submitted summary of advances before the Assessing Officer, the same is produced as under:- Name of Parties Amount (in. Rs.) Capital Agencies (P) Ltd. 21,85,813.00 Geodesie Limited 1,13,00,000.00 Global El ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er after affording reasonable opportunity of hearing to the assessee, in accordance with law. The Assessing Officer while deciding the issue afresh shall also test the alleged interest free advances on the touchstones of ratio laid down by the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Limited reported as 313 ITR 340. The ground No.2 is allowed for statistical purpose. 6. In ground No.3 of the appeal, the assessee has assailed disallowance of vehicle running and maintenance expenses confirmed by the CIT(A). The assessee has claimed vehicle running and maintenance expenses amounting to Rs. 5,70,459/-. The Assessing Officer disallowed the entire expenditure on the premise that the assessee has failed to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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