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TMI Blog2021 (4) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer's order issued u/s. 143(3) of the Income Tax Act. 2.) The learned Commissioner of Income Tax (Appeal), was not justified in confirming the disallowance of Interest to the extent of Rs. 20,28,015/- on account of interest on term loan, rejecting the submissions and facts of the case, Thus the Commissioner's order is totally violative of natural justice. 3.) The learned CIT (Appeals) should have observed that the assessing officer did not follow the principle of natural justice as he did not grant reasonable time for furnishing evidence, ignoring the facts on records. 4.) The learned CIT (Appeals) as well as the learned assessing officer was not justified in disallowing the various expenses such as telephone expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing through financial crisis. As huge stock is lying in godown and he was thinking of winding up the business by selling the existing stock. However, administrative expenses debited to Profit & Loss A/c. are incurred at 50% compare to last year in regular course of business except interest on loan."? 4. Upon assessee's appeal learned CIT(A) confirmed the Assessing Officer's action. He held as under:- "I have carefully gone through the Assessment Order and the submissions made on behalf of the appellant. In this case, the appellant had claimed Rs. 20,28,01.5/- on account of interest on term loan. The A.O. disallowed the claim of the appellant on the ground that on one hand the appellant wants to pay creditors promptly by borro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 37(1) of the I.T. Act. Reliance in this connection is placed on the decision of the CIT vs. H.R. Sugar Factory Pvt. Ltd. [187 ITR 363 (All.)]. In this connection, it was held that "had the money not advanced to the directors it would have been available to the assessee for its business purposes and to that extent it may not have been necessary to borrow from the banks". In this case also, had the money not been advanced interest free to associate concern M/s. Mohan Impex to that extent, it may not had been necessary to borrow from the banks. Similarly, if the debtors were also charged interest perhaps there was no need to pay interest of Rs. 20,28,015/-. Reliance is also placed on the decision of M/s. Triveni Engineering Works Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretion and Assessing Officer cannot decide this aspect. Without any finding that assessee has actually not taken the loan and not paid interest on the loan or that assessee had diverted interest-bearing funds such addition lack cogency. In this view of the matter in our considered opinion the addition is not sustainable. Hence, the same is directed to be deleted. 9. As regards disallowance on estimated basis out of travelling and telephone expenses we find that the same has been done without bringing on record cogent material. Just writing that personal expenses cannot be ruled out the same cannot be ipso facto a ground for disallowance of expenditure. In this view of the matter in our considered opinion the addition made by the revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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