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TMI Blog2017 (12) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Appeals) on this ground. - Decided against assessee Disallowance of interest - Held that:- Advance was given out of own interest free funds on account of commercial expediency. The advance given to Positive Life Style Developers Pvt. Ltd. is to the tune of ₹ 43,75,000/- as against the assessee‟s balance in Capital Account ₹ 65,00,000/-. The Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that where both interest free funds and interest bearing funds are available and the interest free funds are more than the investment made, the presumption is that the investments are made out of interest free funds available with the assessee. Thus, in view of undisputed fact that own funds of assessee are sufficient to cover the loan advanced, no disallowance u/s. 36(1)(iii) is called for. Advances to employees - Held that:- We are of the considered view that the Assessing Officer cannot step into the shoes of assessee to determine the quantum of advance to be given to the employees and mode and time of recovery of same. It is the discretion of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Carriage inward charges Rs.1,00,000/-. b. Packing Material Rs.1,25,000/-. c. Printing Stationery Rs.50,000/- d. Travelling Expenses Rs.50,000/-. e. Expenses on Car Telephone, etc. Rs.91,500/- Total Rs.4,16,500/- Aggrieved by the assessment order dated 22-12-2010, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the additions made by Assessing Officer on account of Bad Debts written off and disallowance of interest payment. In respect of ad hoc disallowance on various items the Commissioner of Income Tax (Appeals) restricted the disallowance to ₹ 2,00,000/-. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals) in confirming the additions. 3. Shri V.L. Jain appearing on behalf of the assessee submitted that he would not be pressing ground No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife Style Developers Pvt. Ltd. and had also given interest free advances to its three employees i.e. Prakash C. Gidwani, Naresh C. Gidwani and Madhav K. Gidwani. The ld. AR submitted that advances made to Nagpal Landmarks and Positive Life Style Developers Pvt. Ltd. were out of commercial expediency. The amount advanced to Nagpal Landmarks was on account of investment. As far as amount advanced to Positive Life Style Developers Pvt. Ltd. is concerned the assessee had sufficient own funds to cover such advances, therefore, in view of the decision of Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities Power Ltd. reported as 313 ITR 340, no disallowance is called for. As regards advances made to Prakash C. Gidwani, Naresh C. Gidwani and Madhav K. Gidwani are concerned they are the employees of assessee. No disallowance is to be made on amounts advanced to employees. 3.3 In respect of ground No. 4 the ld. AR submitted that the Assessing Officer made ad hoc disallowance of ₹ 4,16,500/- without there being any material to show that the assessee has not incurred the expenditure for business purpose. In first appeal, the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stice. The ld. AR of assessee stated at the Bar that he is not pressing ground No.1. Accordingly, ground No. 1 raised in the appeal by assessee is dismissed as not pressed. 6. In ground No. 2 the assessee has assailed disallowance of ₹ 41,44,485/- on account of Bad Debts written off. The case of assessee is that the assessee had advanced sum to the tune of ₹ 64,68,034/- over the period of time to Jashnani Leasing Finance Ltd. for purchase of shares. The contention of the assessee is that the assessee wanted to trade in shares. However, the authorities below after analyzing the documents on record and facts of the case came to the conclusion that in the earlier assessment years the assessee had made investments in shares and had offered the gain arising on sale of shares as Capital Gain. The fact that in the earlier assessment years the assessee had offered the profits from sale of shares as Short Term Capital Gain has not been disputed by the assessee. As per the contentions of the ld. AR the assessee was having running account with Jashnani Leasing Finance Ltd. and thus, the assessee over the period of time had advanced ₹ 64,68,034/- to Jashnani Leasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmarks Rs.29,76,480/- Rs.5,98,612/- Positive Life Style Developers Pvt. Ltd. Rs.43,75,000/- Rs.4,96,414/- Prakash C. Gidwani Rs.4,37,338/- Rs.70,113/- Naresh C. Gidwani Rs.4,18,030/- Rs.47,799/- Madhav K. Gidwani Rs.9,72,920/- Rs.1,54,517/- Total Rs.13,67,455/- As regards amount advanced to Nagpal Landmarks, the contention of assessee is that the amount has been advanced for investment purpose, therefore, no disallowance on the ground of diversion of funds for nonbusiness purpose is called for. We do not find any merit in the submissions made on behalf of assessee. Except for bald assertions the assessee has not placed on record any documentary evidence, whatsoever to show that advance to Nagpal Landmarks was in the form of investment against property. In so far as advance to Positive Life Style Developers Pvt. Ltd. is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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