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TMI Blog2021 (4) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, pursuant to selection of assessee's return for scrutiny under CASS, the assessment proceedings u/s. 143(3) of the Act were taken up. The AO observed from books of account of the assessee that the assessee firm had given an interest free loan of Rs. 38.00 lakhs to its Managing Partner, Shri N. Suresh Reddy whereas, the assessee was paying interest on loans taken by it @13.25%. Therefore, he required the assessee to explain as to why the expenditure should not be disallowed u/s. 37(1) of the Act since it is not expended wholly and exclusively for the purpose of assessee's business. The assessee stated that the amount was paid to the Managing Partner, Shri N. Suresh Reddy, for construction of a shed which was used by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that the assessing officer erred in disallowing the interest of Rs. 30,85,923/- on the ground that the assessee advanced interest free loans from the interest-bearing funds. 5. The Hon'ble CIT(A) ought to have observed that the assessing officer ought to have observed that the assessee advanced the amounts in the course of business and business expediency was the main reason for making such advances. 6. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in disallowing Rs. 23,150/- by invoking provisions of section 40A(3) and therefore the same is liable to be deleted. 7. The Hon'ble CIT(A) ought to have observed that the assessing officer without mentioning any details disallowed certain amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that the assessee has failed to furnish any evidence in support of his claim of business expenditure except for making a bland statement that the interest free loan was given to the Managing Partner for construction of the shed which was used for its business purposes. As regards the disallowance of the administrative expenses, he placed reliance on the assessment order. 6. Having regard to the rival contentions and the material on record, I find that the assessee has given interest free loan of Rs. 38.00 lakhs to its Managing Partner and the assessee claims that the MD has used it for assessee's business purposes only, and in support of contention, the learned Counsel for the assessee has placed reliance upon the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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