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TMI Blog2022 (9) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of its agreement. The said working capital provided to the CBUs was taken into account by the parties while fixing the bottling charges payable under the agreement. CIT(A) concluded that the working capital loan availed by the Assessee from the Standard Chartered Bank had been used wholly and exclusively for the business purposes and therefore, deleted the addition on account of interest payment on loan made by the AO. Expenses of legal and professional fees as well as the warehousing and demurrage charges, debited to the profit and loss account CIT(A) held that since the AO has not alleged that these expenses are bogus or of a personal nature the same do not warrant any disallowance. CIT(A) held that the said expenses have been incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that the borrowed funds advanced by the Assessee to the Contract Bottling Units ( CBUs ) were not used by the Assessee for the purposes of business since no revenue was disclosed from such activities. He further states that the ITAT failed to consider that the CBUs are separate and distinct entities and therefore, the Assessee had failed to prove a direct nexus of the said interest expenses for its business purposes as stipulated under Sections 36 and 37 of the Income Tax Act, 1961 ( The Act ). 3. The learned counsel for the Appellant states that ITAT also erred in upholding the CIT(A) s order and deleted the disallowance of Rs.44,74,729/- made by the AO on account of legal and professional fee expenses without considering that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangement between third party contract bottling units (CBUs). The working capital is advanced to these CBUs so as to enable them to procure material, undertake manufacturing and maintain stocks and debtors for the assessee. The assessee's profit earning source is the arrangement with the CBUs wherein the assessee provides working capital to these CBUs to enable them to procure materials and carry out large scale manufacturing of alcoholic beverages and deliver the same to the assessee's customers on its behalf. Thus, from this it is clear that working capital loan was taken by the assessee for its business purpose and use for business purposes only. Therefore, the CIT(A) was right in deleting this disallowance. Ground No. 1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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