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TMI Blog2019 (11) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of the expenses for non-business purpose cannot be ruled out and accordingly, he disallowed ₹ 2% on aggregate amount on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance of expenses is called for - Ground of the assessee is allowed. Disallowance u/s 36(1)(iii) - Revenue s case that assessee has diverted borrowed funds to its sister concerns and for which no interest has been charged - HELD THAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o vide order dt.24.11.2017 (in appeal No.CIT(A), Pune-3/10121/2016-17) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee and Revenue are now in appeal before us. 3. The ground raised by the assessee in ITA No.62/PUN/2018 for A.Y. 2013-14 reads as under : On the facts and in the circumstances of the case and in law, the Hon ble CIT(A) has erred in upholding the disallowance of INR 22,15,000 at an ad-hoc rate of 2% of certain expenses under section 37(1) of the Act without appreciating the same were incurred for the purpose of business. 4. On the other hand, the grounds raised by the Revenue in ITA No.367/PUN/2018 reads as under : 1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not having the name and signature of the recipients. AO was therefore of the view that the probability of non-business expenses cannot be ruled out. He accordingly, on adhoc basis, disallowed 2% on aggregate expenses and thus made disallowance of ₹ 22,15,000/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO. Aggrieved by the order of Ld.CIT(A), assessee is now before us. 6. Before us, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that assessee had produced all the bills and vouchers and the other relevant documents. He submitted that AO has proceeded to disallow the expenses on adhoc basis and has not pointed out the single instance where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be ruled out and accordingly, he disallowed ₹ 2% on aggregate amount on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance of expenses is called for. We therefore direct the deletion of addition made by the AO. Thus, the ground of the assessee is allowed. 8. In the result, the appeal of assessee is allowed. 9. Now we take up the appeal of Revenue in ITA No.367/PUN/2018 for A.Y. 2013-14. 9.1. Both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of diversion of interest bearing funds to the sister concerns. Aggrieved by the order of Ld.CIT(A), Revenue is now before us. 11. Before us, Ld. D.R. supported the order of AO and Ld. A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A) and further submitted that on identical facts in A.Y. 2012-13, Revenue had carried the matter before the Tribunal and the Tribunal had dismissed the appeal of Revenue vide order dt.23.01.2019 in ITA No.158/PUN/2017. He placed on record the copy of the order at Pages 106 to 113 of the Paper Book. He further submitted that no disallowance of interest has been made in subsequent years and further when the assessee has adequate interest free funds then a presumption is made that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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