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TMI Blog2020 (7) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue. The tax authorities cannot be allowed to sit on the chair of a businessman and decide what is right or wrong for the business. In this case, we note that the assessee s own funds are far more than the advance paid for booking of bungalow as is clear from the facts given hereinabove. Therefore both the authorities below have grossly erred while deciding the issue. The case of assessee is squarely covered by the decision in the case of CIT vs Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] wherein has confirmed the order of PHALTON SUGAR WORKS LIMITED VERSUS COMMISSIONER OF WEALTH-TAX [ 1993 (8) TMI 41 - BOMBAY HIGH COURT] upholding the order of Tribunal wherein it has been held that where interest-free funds availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2014 and accordingly, issued show cause notice to assessee as to why proportionate interest under Section 36(1)(iii) of the Act should not be disallowed as there seems to be no business connection between the advance paid and the business of assessee, which was replied by assessee vide written submission dated 25.11.2016 submitting that the advance of ₹ 49,63,131/- was paid out of interest-free funds comprising Reserves Surplus of the company. The assessee, by referring to the copy of Balance Sheet, submitted that the Reserves Surplus at the beginning of the year was ₹ 84,79,37,828/- and during the year, the company has generated cash of ₹ 18,40,85,924/-. However, the Assessing Officer, brushing aside the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness purpose of buying a bungalow at Nagpur has not been explained. Not only has the appellant to explain the business purposes of an expenditure, it has to further explain whether it is for the existing business or not. The appellant cannot say that it intends to diversify into so and so business and under this pretext, claim spending on each and everything. The businessman has a legal obligation under the Income Tax Act to spend his money for the benefits and furtherance of his existing business. To spend money on a residential bungalow in a totally disconnected fashion on the ground that it had got interest-free funds , is sadly missing the point altogether. If this is allowed, all such personal or disconnected expenditure can be justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below have grossly erred while deciding the issue. The case of assessee is squarely covered by the decision of Hon ble Supreme Court in the case of CIT vs Reliance Industries Ltd. (2019) 410 ITR 466 (SC) wherein the Hon ble Supreme Court has confirmed the order of Hon'ble Bombay High Court upholding the order of Tribunal wherein it has been held that where interest-free funds available with assessee were sufficient to meet the investments, it could be presumed that the investment was made from interest-free funds available with the assessee. We, therefore, respectfully following the same, set-aside the order of ld. CIT(A) and direct the Assessing Officer to delete the disallowance. 7. In the result, appeal of assessee is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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