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TMI Blog2016 (1) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... d in cash at ₹ 18,19,487/- which was on ad hoc basis, but CIT(A) after analysing the material available and placed on record by the assessee, came to the conclusion that the disallowance is required to be made only to the extent of ₹ 2,50,000/-. This was also upheld by the Tribunal on a further appeal by both the sides. Therefore, when both the appellate authorities have upheld ad hoc addition, therefore, in our view, when estimate has been made even by the AO, it was partly modified by the first appellate authority and upheld by the Tribunal, is also based on appreciation of evidence and is thus a finding of fact and no substantial question of law can be said to arise in this year as well. - Decided against revenue Disallowance of interest - ITAT deleted the addition - Held that:- when there was no agreement to charge interest from the persons, to whom the assessee advanced short term loan/advance, the AO could not disallow part of the interest. It is also an admitted fact, as observed by the Tribunal, that the AO .vas not able to pin pointedly come to a definite conclusion that how interest bearing loans had been diverted towards interest free advances and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (AO) while holding that the refund of the tuition fee as aforesaid was not verifiable with reference to the amounts refunded to the respective students and to the extent of amounts having been paid by cheques, the AO allowed the same, but insofar as the tuition fee which was refunded by cash, since the same being not verifiable, the amount stood disallowed. During the course of proceedings the assesses was directed to file confirmatory letters or/and other material to justify the claim of aforesaid payments. While it is claim of the assessee that to the maximum possible extent confirmations/certificates were filed and prior to that they had obtained receipts wherever amount was refunded. However, the same did not find favour with the AO and he disallowed the aforesaid amount. Insofar as disallowance out of interest is concerned, the AO held that interest bearing loans had been diverted towards interest free loans/advances to friends and relatives and the assessee ought to have charged interest as the assessee was paying huge interest on the loans borrowed. While the claim of the assessee was that on account of business expediency, amounts were advanced and that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not considered the issue in the right perspective and no case was made out by the assessee for deletion of the amount which was rightly made by the AO. Secondly, insofar as the issue of interest is concerned she contended that the assessee on the one hand took huge loans from bank on which he was paying interest but on the contrary he advanced loan without interest to friends and relatives which is unjustified and the assessee ought to have charged interest when interest bearing loans had been taken and the disallowance had rightly been made by the AO. She also contended that substantial questions of law arise out of the order of the Tribunal and requires consideration by this court. 8. Per contra, learned counsel for the assessee contended: (1) insofar as refund of fee is concerned, the assessee had produced adequate material and evidence in the shape of confirmations/certificates/receipts of the various students/(parents) who for diverse reasons moved out of the institute for taking coaching elsewhere. He also contended that it is not that the entire tuition fee was refunded and as per the agreement/understanding with the students/(parents), only some amount was refunded to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. In addition to the seven students as aforesaid, there was a denial by parents of four other students about non receipt of refund and drawing inference, the AO disallowed the entire repayment of the amount by cash. Some additional material/evidence was placed by the assessee before the CIT(A) as it was noticed that adequate opportunity was not granted by the AO. The CIT(A) admitted the additional evidence, and such additional evidence which was placed before him was forwarded to the AO for comments and it has been observed by the CIT(A) that the AO did not make any adverse comment on the additional evidence. Analysing the material in its entirety, including the additional evidence placed by the assessee, the CIT(A) was of the view that out of 175 students he was satisfied that there was no justification for disallowing entire amount of ₹ 21,51,100/- and on a finding of fact recorded by him accepted that insofar as six cases are concerned, the assessee was unable to lead proper evidence or/and there was refusal by the parents of the fee refunded. He, therefore, restricted addition to the extent of ₹ 86,500/-. The Tribunal on a further appeal went into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if at all, being interest free, is to the extent of ₹ 98,93,950/- which is far below the capital of the assessee and, therefore, the Tribunal has rightly come to the conclusion that to the extent of his own capital the assessee could advance money without interest for business expediency or/and relatives, and none can be forced to charge interest. It is also noticed by the lower authorities that assessee earned bank interest to the extent of ₹ 24,48,843/- out of which he paid total amount of ₹ 10,99,099/- to the bank against loan and over draft, and it is out of the amount which has been paid by the assessee at ₹ 10,99,099/- that the AO has disallowed the interest. 13. Taking into consideration the fact as noticed hereinabove, in our view as well, when there was no agreement to charge interest from the persons, to whom the assessee advanced short term loan/advance, the AO could not disallow part of the interest. It is also an admitted fact, as observed by the Tribunal, that the AO .vas not able to pin pointedly come to a definite conclusion that how interest bearing loans had been diverted towards interest free advances and since the AO was not able to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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