9911796707
TMI Blog2013 (6) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid disregarding provisions of section 36(1)(iii) of Income Tax Act, 1961." 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of liaison work and merchandising. Assessee filed the return of income declaring the total income of Rs. 6,09,290/-. Assessment was completed u/s 143(3) of the Act and the assessed income was determined at Rs.7,61,190/-. During the assessment proceedings, AO made certain disallowances like car expenses, car depreciation and petrol expenses (Rs. 15,710/-); staff welfare and travelling & conveyance expenses (Rs. 4,749/-) and interest paid on loan (Rs.1,31,441/-) totaling to Rs. 1,51,900/- and details are given in the body of the assessment order. Aggrieved, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,33,000/-. Accordingly, he granted relief of Rs. 38,141/-. Para 6 of the CIT (A)'s order is relevant in this regard. Further, Ld Counsel brought our attention to page 9 of the paper book ie a letter dated 29.6.2010 written to the CIT (A) during the first appellate proceedings and mentioned that the interest of Rs. 92,912/- is directly related to the loan of Rs. 11.6 lacs involving Tarachand Kashyap - HUF. The said amount of Rs 11.60 lakhs was utilized for purchase of the business asset. Therefore, the said interest cannot be deemed as interest unrelated to the business. He mentioned that the said amount of Rs. 11.6 lacs was used for the purchase of office premises. In this regard, Ld Counsel mentioned that the balance amount of Rs. 38,529/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahendre Bank and DCB are utilized for lending to the said three parties for non business purpose. Therefore, we are of the opinion that restricting the disallowance to the said amount of Rs. 38,529/- should meet the requirements of the law relating to the provisions of section 36(1)(iii) of the Act. It is a fact that the ratio of the judgment in the case S.A. Builders vs. CIT (2007) 158 Taxman 74 (SC) is relevant here and the advances of Rs. 9.33 lacs were given outside the purview of the established concept of 'commercial expediency'. In principle, we disapprove the estimation method adopted by the CIT(A) in making disallowance restricting to Rs 93,300/-. Therefore, restricting the disallowance to Rs. 38,529/- should meet both ends of just ..... X X X X Extracts X X X X X X X X Extracts X X X X
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