TMI Blog2020 (12) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Ground of the department is dismissed. Disallowance to 50% of the expenditure incurred on boarding and lodging expenses - HELD THAT:- As stated that the assessee could not furnish some of the details, such as names of persons, their identity and purpose of visit etc., which created suspicion to hold that the expenditure was not completely verifiable. Since the assesse has furnished the information merely because of the failure of the assessee to furnish some of the details such as names of persons, purpose of visit etc., disallowance of the entire expenditure unjustified. The assessee is engaged in running the educational institutions and it is needless to say that it has to engage the faculty from outside for which the expenditure required to be incurred. AO did not doubt the genuineness of expenditure. Therefore, we hold that restricting the expenditure to the extent of 50% is reasonable and no interference is called for in the order of the Ld.CIT(A). Therefore, appeal of the revenue on this ground is dismissed. Interest payment to interested persons @18% - AO disallowed the entire interest because of non response from the assesse to the notices issued - HELD THAT:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd by the AO to controvert the finding of the Ld.CIT(A) with regard to non utilisation of cars by the Trust, we are unable to disagree with the Ld.CIT(A), accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. - I.T.A.No.111/Viz/2019, Cross Objection No.66/Viz/2019 Arising out of I.T.A.No.111/Viz/2019 - - - Dated:- 23-11-2020 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Assessee : Shri C.Subrahmanyam, AR For the Revenue : Shri D.K.Sonowal, CIT, DR ORDER PER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : This appeal is filed by the revenue against the order of Commissioner of Income Tax (Appeals), [CIT(A)], Tirupati in I.T.A. No.10034/2016- 17/CIT(A)/TPT dated 03.01.2019 for the Assessment Year (A.Y.) 2013-14 and the cross objections are filed by the assesse with a delay of 10 days. The assesse filed condonation petition stating that the delay was due to medical reasons and requested to condone the delay. After hearing both the parties, the delay is condoned and cross objections are admitted. 2. In the instant case, the revenue filed the following grounds of appeal : i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the details the AO submitted the remand report. The Ld.CIT(A) on receipt of the remand report, allowed exemption u/s 11 and deleted the addition made by the AO. 4.1.2. Against the order of the Ld.CIT(A) the revenue filed appeal before us. During the appeal hearing, the Ld.DR argued that the assesse has not produced bills and vouchers to ascertain the correctness of exemption u/s 11 claimed by the assessee, hence, argued that the order of the Ld.CIT(A) required to be set aside and restore the assessment order. 4.1.3. On the other hand, the Ld.AR relied on the order of the Ld.CIT(A). 4.1.4. We have heard both the parties and perused the material placed on record. In the instant case, the AO denied exemption u/s 11 and made the addition of ₹ 3,50,36,310/- towards surplus income. During the appeal proceedings, the assesse furnished the details and the CIT(A) called for the remand report. During the remand proceedings, the assessee furnished complete details, i.e.ledger accounts and expenses which were examined by the AO and discussed by the Ld.CIT(A) head-wise in his appeal order. The AO at no point of time, made any adverse comments with regard to the exemption cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal hearing before the first appellate authority, the assesse furnished the bills and vouchers and the Ld.CIT(A) has called for the remand report. The AO submitted the remand report, stating that though the assessee had produced the ledger accounts of lodging and boarding, hotel bills and payment details along with the copies of bank statements, the names of persons, their identity and purpose of visit was not furnished by the assesse, hence viewed that the authenticity and correctness of the expenses could not be verified. Therefore, Ld.CIT(A) confirmed the addition of 50% of the expenditure incurred towards lodging and boarding out of total sum of ₹ 17,55,957/-. and deleted the balance amount. While restricting the disallowance to 50%, the Ld.CIT(A) observed that the assesse is engaged in running of educational institution and engaged faculty for college, however, failed to furnish conclusive evidence, therefore, restricted the disallowance to 50%. 5.1. Against which the revenue is in appeal before this Tribunal. 5.1.2. We have heard both the parties and perused the material placed on record. Before the Ld.CIT(A), the assesse furnished the details which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% of interest on loans taken from Managing Trustee and Founder Trustee of the Society. During the course of appellate proceedings, AR of the appellant submitted that the appellant charged interest, @18% on the loans obtained from the interested persons at the market rate charged by the Banks. The AR of the appellant further observed that there is no bar on the rate of charging interest on the loans borrowed from the friends and relatives of the assessee-Society and further contended that the disallowance made by AO is legally untenable. I have considered the claim of the appellant. I find that the appellant charged interest @18% which is a market rate of interest charged by the Banks. There is no specific bar on the higher ceiling of interest to be chargeable on loans borrowed from the friends and relatives of the assessee Society. The Income Tax Act does not provide for fixing the rate of interest payable on such loans. Therefore the disallowance proposed by AO in the remand report is not accepted. Hence, the AO is directed to grant the interest claimed. 6.1. We have heard both the parties and perused the material placed on record. The simple issue involved in this ground i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2. We have heard both the parties and perused the material placed on record. The assesse had entered into rental agreement for letting out the building on 10.04.2009 which was continued thereafter including in the impugned assessment year. The AO did not give any finding with regard to non utilisation of the hostel building for Trust purpose. The AO also did not dispute the genuineness of rent payments as observed from the remand report as well as the order of the Ld.CIT(A) in the earlier years as per the said agreement. The AO also did not suspect the genuineness of the rent payment to Smt.M.Sucharitha in the impugned assessment year. Before the Ld.CIT(A), the assessee furnished the rent agreement which was verified by the Ld.CIT(A) and allowed the expenditure. The assesse filed paper book and in page No.20, the assessee has furnished the copies of rental agreement, wherein, the property was let out to the assessee for a monthly rent of ₹ 1,00,000/- per month and the same was used for hostel building by the society. Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. In the result, appeal of the revenue on this ground i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. 9. The assessee has filed cross objections and withdrawn the original the objections originally raised in CO filed on 31.05.2019. However, subsequently filed a petition requesting for admission of two additional grounds in the petition filed on 21.09.2020 and the same are adjudicated as under: 10. Ground No.6 of cross objection is against restricting the expenditure to 50% in respect of boarding and lodging. As per the detailed discussion made in this order, the order of the Ld.CIT(A) is upheld and the appeal of the revenue is dismissed, thus, the cross objection filed by the assesse in ground No.6 also stands dismissed as per the reasoning given in appeal order. 11. Ground No.7 is related to partly confirming the vehicle rent amounting to ₹ 3,60,000/-. As per the detailed discussion made in this order, we find that the disallowance restricted by the Ld.CIT(A) is held to be reasonable and accordingly we upheld the order of the Ld.CIT(A). For the same reasoning, the cross objection filed by the assesse stands dismissed. 12. In the result, appeal of the revenue as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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