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TMI Blog2019 (8) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... D THAT:- In such type of cases the use of Telephone and Car for personal purposes cannot be ruled out, however the disallowance made by the A.O. and sustained by the Ld.CIT(A) @ 1/5th of the expenses appears to be excessive, I therefore to meet the ends of justice, deem it appropriate to restrict the disallowance to 1/10th of the expenses incurred by the assessee on Telephone, Car and depreciation instead of 1/5th worked out by the A.O. while restricting the above disallowance the A.O. should also give the benefit of the disallowance already made by the assessee - ITA No. 91/Chd/2019 - - - Dated:- 26-8-2019 - Shri. N.K. Saini, Vice President For the Assessee : Shri Ashwani Kumar, CA For the Revenue : Smt. Chandrakanta, Sr. DR ORDER PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 19/12/2018 of Ld. CIT(A)-3, Ludhiana. 2. In the present appeal Assessee has raised the following grounds: 1. That order passed u/s 250(6) of the Income Tax Act, 1961 is against law and facts on the file in as much as the Ld. Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Sanjay Bansal ₹ 65,00,000/- 3. M/s Fab Texere India P. Ltd. ₹ 44,60,000/- 4. Sh. Amit Aggarwal ₹ 19,00,690/- 5.1 The A.O. asked the assessee to provide the breakup of deduction claimed under section 57 and draw nexus between the interest paid and received for the purpose of allowability of expenses under section 57 of the Act. The assessee submitted that no fresh loans had been raised during the year rather the loans had been squared up for which the interest was being paid in the past. The assessee filed the reply to the A.O. as under: Your Honour asked the assessee to justify the claim of interest paid u/s 57 of the act, against interest income, a reply to the same has already been submitted during the course of assessment proceedings on 15.03.2016. Further, it is submitted that the assessee is maintaining books of account both in respect of transaction of his proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest-Free Funds [ Capital + Interest-Free Loans Received) Interest-Free Loans Given 12.04.2010 7,64,25,090.38 3,56,17,542.00 28.06.2010 7,64,36,758.00 4,33,20,542.00 13.08.2010 7,86,71,310.00 4,89,60,542.00 13.01.2011 8,13,62,852.00 5,85,62,632.00 14.02.2011 8,06,37,577.00 5,59,90,232.00 05.03.2013 4,71,35,845.00 1,10,83,450.00 From the above, it could be deduced that the amount of Interest-Free Loans advanced were effected out of the appellant's capital and interest-free loans received. No borrowed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proportionate interest expenditure could be made, since interest paid on capital borrowed was used for the purposes of Business of the appellant, and, hence an allowable expenditure. Hope Your Honor would find the above position in order, and, shall proceed to adjudicate the appeal accordingly. 7. The Ld. CIT(A) inclined to agree with the contention of the A.O. and held that the assessee had failed in clear terms to distinguish between the source of borrowed funds or own funds for the purpose of claim under section 57 of the Act. Accordingly the disallowance of ₹ 15,44,043 made by the A.O. under section 57 of the Act was upheld. Reliance was placed on the following case laws: Smt. Padmawati Jaikrishna Vs. Addl. CIT 166 ITR 176 (SC) Mrs. Arundhati Balkrishna Vs. CIT, Ahmedabad. 177 ITR 275 (SC) Vijay Laxmi Sugar Mills Ltd. Vs. CIT 191 ITR 647 (SC) Karnataka Forest Plantations Corpn. Ltd. 156 ITR 275 (Karnataka HC) CIT Vs. Rajendra Prasad Moody [1978] 115 ITR 519 (SC) Smt. Virmati Ramakrishan Vs. CIT 131ITR 659 (Guj. HC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance of ₹ 2,01,874/- out of car expenses, depreciation, telephone and travelling expenses when the assessee himself had disallowed a sum of ₹ 1,74,371/- out of the above said expenses. 13. The facts related to this issue in brief are that the A.O. during the course of assessment proceedings noticed that the expenses incurred by the assessee were mixed in nature, he disallowed 1/5th of the expenses incurred by the assessee on Telephone, Car Repair, Car Insurance, Car Expenses and Depreciation as per following details: Sr. No. Particulars Amount 1/5th addition 1 Telephone Expenses 267081 ₹ 53416/- 2 Car Repair 58258 ₹ 11652/- 3 Car Insurance 160916 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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