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TMI Blog2019 (4) TMI 1892X X X X Extracts X X X X X X X X Extracts X X X X ..... n disallowing the expense. We note that having gone through the order of the ld. CIT(A), we do not find any infirmity in the order passed by the ld. CIT(A), therefore we uphold the order of the ld. CIT(A) and dismiss the grounds of appeal raised by the revenue. Disallowance on account of interest paid which were not utilized for the purpose of business - HELD THAT:- Interest was paid on loan taken for purchase of vehicle hence the interest payment is an allowable expense. So far as interest paid on packing credit loan and interest paid on over draft and cash paid accounts, we are of the view that the interest on amount which is used for the purpose of giving interest free loan to sister concern can at most be disallowed. As per the working given by the Counsel, the assessee has paid interest on the amount utilized for the purpose of giving interest free loan to sister concern. Hence, at the most interest to the tune can be disallowed. Since, the working given by the Counsel requires verification, hence the A.O. is directed to verify this working given by the ld Counsel in his submission. Appeal of the Revenue is dismissed. - ITA No.324/Kol/2014 - - - Dated:- 30-4-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2011. In response, a submission was made by assessee on 16.12.2011 enclosing some documentary evidences of these parties e.g. PAN card, ledger account, Registration Certificate under VAT, copy of Bank statements of the assessee, bills to prove that transactions. The AO noticed that these transactions were there at least on papers although no evidence could be furnished by assessee in support of its physical existence. The AO noticed that the assessee has claimed to have entered into the following transactions with the parties. Name of party Head of Expenditure Details of expenses Amount debited (in Rs.) Amount paid during F.Y. 2008-09 M/s Yashoda Distributors P Ltd. Repairs of Plant Machinery Purchase of Aluminium Tray 26,00,000 NIL M/s NarmodaDealcomm Pvt. Ltd. Do Iron and Steel (M.S.Sheet, M.S. Rod, M. S. Channel, M.S. Angel), material supply for generator overhauling, lift overhauling etc. 30,65,156 NIL M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o suggest that these parties never existed physically. Therefore, the AO treated bogus expenditure to the tune of ₹ 71,85,948/- and made addition to the income of the assessee. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by assessing officer. 6.We have heard both the parties and perused the material available on record. Before us,ld DR for the Revenue has primarily reiterated the stand taken by the assessing officer whereas, ld Counsel for the assessee defended the order passed by the ld CIT(A). We note that the assessee has submitted the following documents and papers before the Assessing Officer in respect of purchases from Yashoda Distributors Pvt. Ltd., M/s Narmada Dealcomm Pvt. Ltd., M/s Sagar Vintrade Pvt. Ltd. Confirmation Letters from the parties. Xerox copy of Pan Card. Ledger for F.Y. 2008-09 as per their books of accounts. Xerox copy of VAT Registration Certificate. Xerox copies of the Bills. Ledger for F.Y. 2008-09 as per assessee s books of accounts. Ledger for F.Y. 2009-10 as per assessee s books of accounts. Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase bills were made through banking channels. The three parties are Pvt. Ltd, Companies, whose master data as per MCA Website is also furnished in the Paper Book. Therefore , it is argued that the other allegation of the AO that assessee procured bills from the parties available in the market who are engaged in giving entries to the business communities for the purpose of booking expenditure and reduce profit , is nothing but general in nature made on his own surmises and conjectures in disregarding the evidences furnished by the assessee. We note that without bringing on record any material evidence, the AO has leveled this allegation upon the assessee which has no legal sanctity and is being factually incorrect. We note that the assessee has furnished all reasonable evidences before AO and simply because notices U/s 133(6) issued to the parties returned by postal authorities with remark Not Known or parties are. not cooperating with the assessee, purchases made from them cannot be treated as Bogus or not genuine by disregarding all other overwhelming evidences furnished to the AO and brought on record. We note that the judgment of the jurisdictional High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said expenses were excessive as compared to the earlier year and not for the purpose of the business. 12. On appeal by assessee, the ld CIT(A) deleted the additions except addition on account of Travelling Expenses of ₹ 12,37,500/-. Aggrieved, the Revenue is in appeal before us. 13. We have heard both the parties and perused the material available on record. Before us, the ld. DR for the Revenue, has primarily reiterated the stand taken by the Assessing Officer which we have already discussed in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel of the assessee has defended the order of the Ld CIT(A).We note that the ld. Counsel has explained the business necessity of the expenses and has submitted that the expense has been incurred for the purpose of the business of the assessee. The issue of disallowance of repair expense has already been covered in ground no. 2 of the appeal. It is noted that the A.O. has made the disallowance on vague reason that the expense of this year is more than earlier year and the expense has not been incurred for the purpose of the business of the assessee. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Glass Ltd. (2003) 179 CTR (Cal) 602, 602-603 where it has been observed that interest paid on the capital borrowed by the assessee-firm and diverted the same as interest-free loans to the relatives of its partners is not deductible. In the decision of Tirupati Trading Co. v. CIT (2000) 242 ITR 13, 18 (Cal) it has been observed that where there was no evidence to prove that the amount had been borrowed for purposes of the business of the assessee, interest on such borrowings was held not deductible. Interest on borrowed capital used for advancing interest-free loans to subsidiary company, Lions Club and EmployeesConsumers Co-operative stores has been held not deductible CIT v Orissa Cement Ltd. (2002) 258 ITR 365, 368, 369-70 (Del). In view of the above, whole sum of interest paid of ₹ 77,89,408/- is disallowed, being not incidental to the assessee's business activity and added back to the total income of the assessee. 16. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by AO. 17. We have heard both the parties and perused the material available on record. Before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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