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TMI Blog2020 (5) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the disallowance made in respect of business promotion expenses aggregating to Rs. 9,59,300/- without appreciating that the expenses were incurred wholly and exclusively for the purpose of business and hence, confirming the disallowance of the same is unjustified and liable to be deleted. 2. The Ld. CIT(A) failed to appreciate that expenses incurred were in the nature of business advertisement and not donation and the payment to MCA for corporate membership was incurred towards business prospects and growth of the company and hence, the disallowance of the entire amount aggregating to Rs. 9,59,300/- is unjustified and liable to be deleted. B. Disallowance of excessive interest u/s.40A(2)(a) - Rs. 4,68,73,515/- 3. The Ld. CIT(A) erred in partly confirming the disallowance of Rs. 4,68,73,515/- out of interest expenses applying the provisions of sec.40A(2)(a) of the Act without appreciating the fact that the entire funds borrowed from the sister concerns were utilized wholly and exclusively for the purpose of business and hence, the disallowance of part interest amounting to Rs. 4,68,73,515/- is without any justification and liable to be deleted. 4. The Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of Business Promotion Expenses of Rs. 9,59,300/- and disallowance of excessive interest under section 40A(2)(a) of Rs. 5,95,43,939/-. On appeal before the ld. CIT(A), both the additions/disallowance were confirmed. Thus, further aggrieved, the assessee has filed the present appeal before this Tribunal. 3. We have heard the submission of both the parties and perused the record carefully. 4. Ground No.A relates to disallowance on account of Business Promotion Expenses. The ld. AR of the assessee submits that assessee is incurred these expenses for promotion of its business. The assessee incurred major expenses which consist of corporate membership of Mumbai Cricket Association, on social functions and donation. The AO has recorded the expenses in para of his order in the following manner: Date Name of recipient Amount 15.06.2010 Mumbai Cricket Association 5,45,200/- 07.07.2010 Republican Party of India for distribution of notes to poor students 5000/- 19.07.2010 United association for social education and public Welfare (Dahihandi) 1,10,000/- 31.07.2010 ISCON 31,000/- 19.08.2010 S.V.S. Jain Sangh Lokhandwala 5,100/- 30.08.2010 Vishnu Narayan mahilaAdhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hoarding for its advertisement, Rs. 5000/- were incurred for distribution of note books to the poor student, Rs. 1,10,000/- on social education and public welfare in Dahihandi function. The other major expenses consist of expenses incurred on hoarding and payment made to Unnati Seva Sangh and United Association of Rs. 1,02,222/- besides the membership expenses of Rs. 5,45,200/-. Rest of the amount are very meagre amount paid on account of donation either in the form of distribution of Notebook to poor student, donation to ISCON, JVS Jain Sangh Lokhandwala, Vishnu Narayan MahilaAdharManch, Tukaram Mokal nad Surendra Pathare. 8. The Hon'ble jurisdictional High Court in Otis Elevator (supra) held that when the assessee incurred expenses for promotion of club fees with a view to enable the assessee to improve its relation and prospects, the payment must be allowed as business expenditure. Similarly the other expenses, genuineness of which were not disputed by the lower authorities which mainly consist of either donation to various charitable organizations, distribution of Notebook to poor student and expenses incurred during the festival season for erecting hoarding are also allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest, however, on appeal before the ld. CIT(A), the addition/disallowance was deleted. On further appeal before the Tribunal, the action of ld. CIT(A) was affirmed vide order dated 17.01.2018 (Puspanjali Realtors Pvt. Ltd. In ITA No. 483/Mum/2016). We have further noted that the assessee has availed unsecured loan from its sister concern. The ld. AR of the assessee has filed a copy of assessment order of M/s Ahuja Properties and Associates (PAN No. AAHFA4921B), wherein the interest income from assessee-company for Assessment Year 2011-12 was accepted in the assessment order passed under section 143(3) dated 20.03.2014. 13. Therefore, considering the facts of the present case and the submission of ld. AR of the assessee, we have noted that neither the Assessing Officer has brought on record that the interest paid by the assessee is on higher side as compared to the market rate for getting the unsecured loan for such business as undertaken by assessee. Nor the Assessing Officer has recorded that assessee made the payment to its sister concern for evasion of tax. Moreover, we have noted that on similar rate of interest, the addition was deleted in assessee's group case in Pus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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