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2017 (12) TMI 794 - ITAT PUNEDisallowance of Bad Debts written off - loss on account of share transactions - the amount was advanced by the assessee for purchase of shares for investment purpose - Held that:- Commissioner of Income Tax (Appeals) has given a categoric finding that the assessee had shown Short Term Capital Gain arising from sale of shares in the return of income for assessment year 2006-07. It is assessee's own case that he was having running account with Jashnani Leasing & Finance Ltd. If that be so the running account must be in respect of purchase of shares for investment purpose. The return(s) filed in the past by the assessee did not indicate that the assessee at any point of time was engaged in share trading business. The inevitable conclusion that can be drawn from the facts of the case is that the loss on account of share transactions is a capital loss. The loss arising from "investments" in shares cannot be claimed as bad debt under the provisions of section 36(i)(vii) r.w.s. 36(2)(i) of the Act. We do not find any infirmity in the well reasoned findings of Commissioner of Income Tax (Appeals) on this ground. - Decided against assessee Disallowance of interest - Held that:- Advance was given out of own interest free funds on account of commercial expediency. The advance given to Positive Life Style Developers Pvt. Ltd. is to the tune of ₹ 43,75,000/- as against the assessee‟s balance in Capital Account ₹ 65,00,000/-. The Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that where both interest free funds and interest bearing funds are available and the interest free funds are more than the investment made, the presumption is that the investments are made out of interest free funds available with the assessee. Thus, in view of undisputed fact that own funds of assessee are sufficient to cover the loan advanced, no disallowance u/s. 36(1)(iii) is called for. Advances to employees - Held that:- We are of the considered view that the Assessing Officer cannot step into the shoes of assessee to determine the quantum of advance to be given to the employees and mode and time of recovery of same. It is the discretion of assessee to decide the quantum of advance, period of advance and the mode of recovery of advance from an employee. The only factor that has to be established is that the persons to whom advances are made are the employees of assessee. As pointed earlier this fact has not been disputed. Accordingly, we are of considered view that in the facts of present case, no disallowance of interest is to be made in respect of advance made to three employees of assessee. Accordingly, ground No. 3 raised in the appeal by assessee is partly allowed in the manner aforesaid. Ad hoc disallowance in respect of various expenses which inter alia include Carriage Inward, Packing Material, Printing & Stationary, Travelling Expenses, Vehicle Repairs, Insurance, Depreciation and Telephone Expenses etc. - Held that:- After perusal of the orders of authorities below and taking into consideration totality of facts, we are of considered view that disallowance in respect of various office expenditure, if restricted to ₹ 1,00,000/- would be suffice to cover omissions and commissions. Accordingly, ground No. 4 raised in the appeal by assessee is partly allowed.
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