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TMI Blog2016 (8) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... een able to substantiate its claim that the advance was given on commercial consideration. - Decided against assessee. Ad hoc disallowance of Kapas expenses - Held that:- As cash payments were made to labourers and these were for exigency of business. It is of the view that there was no basis for the authorities below to reject the claim of expenses of the assessee - Decided in favour of assessee. Disallowance of pressing expenses - Held that:- The disallowance made by the authorities below is not justified - Decided in favour of assessee. - ITA No. 118/Ind/2014 - - - Dated:- 25-7-2016 - Shri D.T. Garasia, Hon'ble Judicial Member For The Appellant Shri S.N. Agrawal and Shri Pankaj Mogra For The Respondent Shri Mohd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration temporary advance was given that too for business purposes. The assessee has taken loan from State Bank of India in the form of cash credit limit of ₹ 63310783/-. The amount so borrowed was utilised towards the object for which the said loan was taken. The amount due from sundry debtors was ₹ 94451128 and closing stock on 31st March was ₹ 55652564/-. Therefore, the assessee has not diverted the interest bearing funds for non-business purposes. The learned counsel for the assessee submitted that when the assessee has interest free funds in his account, no disallowance of interest can be made. The learned counsel for the assessee relied upon the order of the Tribunal in ITA No. 602/Ind/2014 and he al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with this party prior to this advance and subsequently the assessee had no business connection with M/s K.S. Consupro India Pvt. Ltd.. Moreover, the assessee did not produce any evidence to show that this advance was given for business purposes. The assessee agreed before the lower authorities and before me also that the interest may be charged @ 9% but the assessee wansted to take the benefit that he having sufficient interest free fund of ₹ 119791242/-. Therefore, no interest has been charged but in my view the assessee has a partners account and sundry creditors. Moreover, the assessee has taken total interest bearing funds of ₹ 67007411/-. Therefore, when the assessee is paying interest on the amounts borrowed by it, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against which kapas expenses were debited to ₹ 19.46 lacs. The Assessing Officer on verifying these found that all the expenses were made in cash including some of the payments being more than ₹ 20,000/- each. The assessee submitted that these payments were made to labourers. The Assessing Officer accordingly disallowed ₹ 1 lac and added the same to the total income of the assessee. On appeal, the learned CIT(A) reduced the disallowance to ₹ 75,000/-. Now the assessee is in appeal before the Tribunal. 8. Before me, the learned counsel for the assessee submitted that cash payments were made to labourers and these were for exigency of business. On the other hand, the learned DR refutted the submission of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the assessee. The same was reimbursed by the assessee to the above party. Since the amount exceeded the statutory limit of ₹ 1.20 lakhs, the assessee was liable to deduct TDS u/s 194 of the Act which the assessee did not do. The Assessing Officer, therefore, disallowed the claim. On appeal, the learned CIT(A) also confirmed the finding of the learned CIT(A). 14. Before me, the learned counsel for the assessee submitted that the findings of the lower authorities are not justified. On the other hand, the learned DR relied upon the orders of the authorities below. 15. I have heard the rival contentions. In my view, it would be appropriate to set aside the issue to the file of the Assessing Officer to have a fresh look. I, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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