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TMI Blog2012 (3) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... traveling expenses as claimed by the appellant in full and refrained from upholding the disallowance of Rs.2,19,703/-. 2. The learned Commissioner (A) ought to have appreciated that the traveling expenses incurred by the wife of the Managing Director of the company along with him was essentially required for the business purpose and was liable to be allowed as held in various judicial pronouncements relied upon and cited before him. 3. The learned Commissioner (A) ought to have appreciated that the interest expenditure incurred by the appellant was exclusively for the purpose of business and no part of the loan was borrowed having been diverted towards non-business purpose. 4. The learned Commissioner (A) ought to have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not allowable. He therefore made the disallowance of ₹ 2,19,703. 5. The assessee carried the matter to the ld. CIT(A) and submitted that the director of company was suffering from hypertension and coronary artery disease, whenever he traveled, his wife accompanied him as an attendant and such expenses was therefore linked to the business of the assessee company, so expenses for business trip of the director was allowable. 6. The ld. CIT(A) after considering the submissions of the assessee observed that the wife accompanying the husband solely as an attendant was not palatable, such accompanying could not be treated exclusively for the purpose of business. He further observed that personal benefit of the director from such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts are not clear as to whether the director traveled for the business purposes, even there is contradiction in the stand taken by both the parties since the AO mentioned that the expenses were incurred for directors and their spouses, while claim of the assessee is that the wife of one of the director accompanied him because he was suffering from various diseases. The ld. CIT(A) confirmed the action of the AO by observing that the inherent element of enjoyment and entertainment to wife from such trips could not be ruled out. But nothing is brought on record to substantiate the above observations. We therefore considering the totality of the facts as discussed herein above and particularly in the absence of clear facts brought on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid amount was to be disallowed. He worked out the notional interest by applying 12% rate of interest on the amount of ₹ 1,76,91,011 and made the addition of ₹ 21,22,921. The assessee carried the matter to the ld. CIT(A) and the submissions made before him as mentioned in para 8 of the impugned order are reproduced verbatim as under: 8. The assessing officer has added back a sum of ₹ 21,22,921/- being 12% (SBI lending rate) on a sum of ₹ 1,76,91,011/- holding it to be the interest attributable to the advance made by the Appellant company to its Director Sri. B.S.Chadha. The interest of ₹ 21,22,921/- was disallowed out of the interest claimed by the Appellant company alleging that the interest was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net of the balance included net of opening balance. Interest in relation to such opening balance cannot be disallowed as there was no disallowance in the past as held by the Hon ble High Court in the case of Sri. Dev Enterprises reported in 192 ITR 165. Accordingly, it is submitted that the disallowance of interest may kindly be deleted. In the circumstances, the impugned additions as made by the assessing officer are opposed to law and liable to be deleted in toto. 13. The ld. CIT(A) after considering the submissions of the assessee confirmed the addition by observing in para 8.1 of the impugned order as under: 8.1 I find the whole argument of the A.R. on this issues is misconceived. The Assessing Officer has, nowhere in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re given out of that surplus. In other words, all the clear facts are not brought on record. In the present case, the ld. CIT(A) confirmed the action of the AO by observing that the AO had specifically picked out the persons who had been advanced interest free loans, however nothing was brought on record to substantiate that those advances were out of interest bearing loans. We therefore, considering the totality of facts, deem it appropriate to set aside the impugned order of the ld. CIT(A) on this issue and the matter is remanded back to the AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. 17. In the result, the appeal is allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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