TMI Blog2021 (4) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted. In the case before me, it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. This contention is not acceptable. The assessee has, in fact claimed it as spent for its business purposes only. Further, the amount spent on construction of shed is not available on record. Therefore,we are not inclined to accept this contention of the assessee and therefore, the disallowance u/s. 37(1) of the Act is upheld. As regards the administrative expenses, we also feel that the disallowance of 10% of the expenses under the respective head is quite excessive. Therefore, restrict the disallowance to 5% of the expenses und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the said expenditure was for the purposes of assessee's business only. The AO, however, was not convinced. He held that the expenditure incurred by the firm by advancing interest free loan to the assessee's Managing Partner is not wholly and exclusively for the purpose of business and therefore, the interest attributable to interest free loan advanced to the partner at ₹ 30,85,923/- was disallowed and brought to tax. The AO also made an ad hoc disallowance of ₹ 4,37,570/- under various heads on the ground that some of the bills/vouchers are not properly maintained/identity is not established as they were in unverifiable condition. 3. Aggrieved by the assessment order, the assessee preferred an appeal before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us heads and therefore the disallowance cannot be sustained. 8. The Hon'ble CIT(A) ought to have observed that the assessing officer without considering the fact that any expenditure cannot be disallowed without mentioning complete details of the expenditure and therefore the disallowance made by the assessing officer was not sustainable. 9. Any other ground will be raised at the time of hearing . 4. The learned Counsel for the assessee submitted that the assessee was a partnership firm and the Partners could withdraw from the firm, their capital at any point of time, and therefore, no notional interest on such withdrawals can be brought to tax or disallowed. In support of his contention, he placed reliance upon the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional High Court in the case of CIT vs. Gopikrishna Muralidhar (Supra). However, this decision is not applicable to the facts of the case before me, as in the said case, it was undisputed that the assessee therein had borrowed the money from HUF for the business of the family and had not borrowed for the purpose of household expenses. It was held that the family was entitled to withdraw from the capital supplied by it, with the result of the capital being depleted. In the case before me, it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. Therefore, this contention is not acceptable. The assessee has, in fact cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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