TMI Blog2021 (6) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company and had derived lease rental income thereon. The said property had been taken on lease by the assessee for housing its staff and business guests who visit Lonavala and which inturn had increased the morale of the employees and assessee was benefitted with good business relations with the customers of the assessee company. Hence, the business nexus of taking that property on lease and using it for the purpose of utilisation by its staff and customers of the assessee had been proved and hence cannot be held to be for non-business purposes. AR before us agreed for an adhoc disallowance of 20% that could be made for the purpose of personal usage in view of common facilities that could be attributed for both personal as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties, the appeal for A.Y.2014-15 is taken as the lead case and the decision rendered thereon would apply with equal force for A.Y.2015-16 also, in view of identical facts, except with variance in figures. 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in disallowing the rent paid to Smt. Shweta Rasiwasia amounting to ₹ 28,89,000/-. The interconnected issue involved thereon is whether the ld. CIT(A) was justified in disallowing the interest proportionately u/s.36(1)(iii) in respect of security deposits paid to director s wife for taking her bungalow on lease. 3. We have heard rival submissions and perused the materials available on record. We find that assessee company is engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possibility of utilisation of the same for their personal use and accordingly, proceeded to disallow the entire expenditure of ₹ 28,89,000/- towards rent as not for the purpose of business. 3.1. For the said property, the assessee had also paid security deposit of ₹ 91,50,000/- to the wife of director. The ld. AO observed that since the property per se is not utilised for the purpose of business of the assessee, there is no business expediency to pay security deposit of ₹ 91.50 lakhs to the wife of director to the said property. The ld. AO observed that since the assessee had interest bearing funds in its financial statements, he proceeded to disallow the interest @12% on a proportionate basis to the extent of security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company. The ld. CIT(A) however, disagreed with the contentions of the assessee and upheld the action of the ld. AO. 3.3. We find that assessee had taken property on lease for the purpose of its business. The said property is situated at Lonavala. The said property belongs to the wife of director of the assessee company. The property has been taken on lease based on a registered lease agreement entered into with the wife of director of the assessee company. We find that Smt. Shweta Rasiwasia had retained some portion of the property for her personal use and had leased out the remaining portion to the assessee company and had derived lease rental income thereon. The said property had been taken on lease by the assessee for h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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