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TMI Blog2015 (3) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... estments. In this case, this presumption was established considering the finding of fact both by the learned CIT(A) and the Tribunal. Interests were deductable all these decisions support the case of the assessee. The A.O. has not proved any nexus between the borrowed funds and interest free loans given - it is clear that assessee has sufficient capital, profit and interest free funds available with him for the purpose of giving interest free loans to the above person. Therefore, proportionate disallowance of interest is wholly unjustified. Disallowance in respect of depreciation and vehicle expenses for personal use - A.O. disallowed 1/5th of these expenses for personal user of the car - CIT(A) restricted the same to 1/8th of the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stensibly for the purpose of business. From the details of loans and advances it was noticed that funds of business of ₹ 51,05,000/-are lying with the relatives/friends of the assessee and these are not for the purpose of business. The assessee was asked to explain as to why interest be not disallowed. It was submitted that with regard to the advance given to Shri Karan Sagar and Priyanka Sagar, these are personal educational loans to the son and daughter of the assessee and the amount debited to the amount of Shri Girish Sagar for jointly purchasing of property which could not materialize and received back in subsequent years. The A.O. was, therefore, of the view that the loans are not for business purpose and are personal loans and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co. Vs. CIT 274 ITR page 354 Allahabad High Court. II. CIT Vs. Prem Heavy Engineering Works (P) Ltd. (2006) 150 Taxman Page 90 Allahabad High Court. III. CIT Vs. Harbhajan Sarbjeet Singh (2006) 151 Taxman Page 127. IV. CIT Vs. Reliance Utilities (2009) 313 ITR Page 340, Bombay High Court. V. S.A. Builder Vs. CIT 206 CTR Page 631 S.C. VI. CIT Vs. Tin Box Factory (2004) 135 Taxman, 145 Delhi High Court. VII. Pranik Service Ltd. Vs. ACIT (2012) 146 TTJ Page 543 (Bombay). 5. We may note here that in the case of Reliance Utility Power Ltd. (Supra) it was held that if there were funds available both interest free and overdraft/loans taken, then the presumption would arise that investments would be out of interest free fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... car cannot be ruled out being the assessee individual, however, the disallowance is reduced to 1/10th of the total claim. This Ground is, therefore, partly allowed. 7. On Ground No.3, assessee challenged the disallowance of ₹ 38,170/- out of telephone travelling staff welfare, sales promotion and Diwali expenses. According to A.O., these expenses are not fully supported by the vouchers and mostly vouchers have been produced, therefore, expenses were not subject to verification. 1/5th of the expenses were disallowed which were modified and reduced by the learned CIT(A) to 1/8th of the expenditure. Considering the explanation of the parties, we find that the addition is justified on this issue, however, the addition is reduced to 1/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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