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TMI Blog2021 (5) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case. 2. The CIT (Appeals) erred in rejecting the several objections raised in the Grounds of the Appeal to the total income determined and the status in which the assessment has been made ( In so far as the addition as business income Is concerned) and dismissing the appeal). 3. The appellant company is one of the authorized dealer of M/s. Hindustan Lever Limited and engaged in marketing of various kinds of products. For storage of such products the appellant company needs a very big go-down / stock yard and for this purposes, the appellant company has executed a Lease Rent Agreement with one Mr.G.Ramesh dated First October 2012. The go-down is situated at Pallavaram Radial Road, Chennai & the size of the same is 22,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble ITAT be pleased to allow the appeal and render justice." 3. Brief facts of the case are that the assessee company is a distributor for Hindustan Lever Ltd., for various products for which it has taken premises on lease, vide lease rental agreement dated 01.10.2012 from one Mr.G.Ramesh, who is also one of the directors of the assessee company. As per the said lease rental agreement, lease rental shall commence from 01.04.2013. The assessee has also paid lease deposit of Rs. 3.40 crores . The assessee company had also, received unsecured loan from Shri G.Ramesh, director of the company amounting to Rs. 4,84,85,119/-, on which interest of Rs. 43,82,716/- has been paid. During the course of assessment proceedings, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest charged to the profit & loss account so as to lower the profit. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 5. The learned AR for the assessee submitted that the learned CIT(A) has erred in confirming disallowance of interest on loan taken from Mr. G.Ramesh without appreciating the fact that lease rental deposit paid to Mr. G.Ramesh and loans taken from Mr. G.Ramesh are two separate transactions and both for the purpose of business of the assessee. The learned AR further submitted that the Assessing Officer as well as learned CIT(A) have disregarded rental agreement filed by the assessee to prove its claim that it has taken premises on lease rental by paying lease deposit and as per the said renta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed from one of the director of the company on the ground that company has diverted interest bearing funds in the form of lease rental deposit to the same director for nonbusiness purposes. We have gone through the reasons given by the Assessing Officer to disallow interest paid on loans u/s.36(1)(iii) of the Act and find that there is no merit in the findings of the Assessing Officer, because the assessee has filed rental agreement copy to prove that it has taken premises on rent by paying lease rental deposit to Mr. G.Ramesh on a monthly rental of Rs. 75,000/- and such rent shall commence from 01.04.2013. Further, the assessee has also produced necessary evidence to prove that it has started paying rental for the premises from next f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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