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TMI Blog2023 (7) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... D THAT:- CIT(A) worked out Rs.44,00,045/- as extended by the appellant towards capital work in progress and working of interest thereon and the same amount, therefore, has been confirmed by the Ld. CIT(A). The reason given by the Ld. CIT(A) as narrated hereinabove seems to be justified in the absence of any assistance rendered by the assessee before us. The same is, therefore, upheld. Disallowance on account of travelling expenses - purpose of travelling was not submitted by the appellant, the details of such travels or the tour since not submitted - HELD THAT:- As the impugned amount was not found related to business, the restriction of addition made by the Ld. CIT(A) to the amount of Rs.2,14,419/- is found to be justifiable. The same is, therefore, confirmed. The ground of appeal is, thus, found to be devoid of any merit and, thus, dismissed. - I.T.A. No. 2696/Ahd/2013 - - - Dated:- 9-6-2023 - Smt. Annapurna Gupta, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : None For the Respondent : Shri Mukesh Jain, Sr. D.R. ORDER PER Ms. MADHUMITA ROY-JM : The instant appeal filed by the assessee is directed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of this, there is no ground of disallowance of any consultancy/interest expenditure proportionately and request you not to make any addition on this ground. 5. As the part of consultancy charges has been paid in connection with term loan for purchase of fixed assets, according to the Ld. AO, such expenditure needs to be capitalized. As per the working of disallowance made by the assessee of Rs.20,76,342/- was, therefore, disallowed and added back to the total income of the assessee holding it capital in nature, which was, in turn, confirmed by the First Appellate Authority with the following observation: (d).2 The appellant reiterated the explanation and contended that AO has not appreciated the facts, explanation and evidences properly. The payments made for consultancy expenses are for advisory services in the matter of financial consultancy for credit facilities and therefore the same is wholly and exclusively for the purpose of business and allowable both u/s.36(1)(iii) of the Act being part of expenses for borrowed capital as well as u/s.37 of the Act. (d).3 As per ledger a/c. of consultancy expenses for 01.04.2009 to 31.03.2010 (Page 51) an expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDS provisions, the same is revenue in character i.e. the expenditure is not to bring into any asset of enduring nature but the controversy is related to proportion out of such expenditure relatable to 'work in progress' for acquisition and establishment of unit giving enduring benefit and before the same put to use, any expenditure relatable to such expenses required to be capitalized. Considering the Hon'ble Gujarat High Court judgement in the case of CIT v. Navsari Cotton Silk Mills Ltd. (1982) 135 ITR 546 detailing various positive and negative tests and Full Bench judgement of Hon'ble Kerala High Court in the case of Rambahadur Thakur Ltd. v. CIT (2003) 1 KLT 687, it is beyond doubt that a part of such expenditure (as evidenced by details of work in progress as well as payment made from term loan a/c. and cc a/c) is for the loans from where substantial payment were made in respect of 'capital work in progress' and not for existing business or continuing the business hence such part is excludable as capital expenditure and not allowable u/s.37(1) of the Act. That part of expenditure is not for commercial expediency for facilitating the carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were not found to be acceptable in the absence of funds flow submitted by the assessee. 8. During the course of appellate proceeding, the assessee submitted as follows: (e).3 The appellant during appeal contended that A.O. has not appreciated the explanation and evidences submitted in this regard. The appellant reiterated the contention of mixed bag of transaction in C.C. a/c. It is also contended that appellant already disallowed (capitalized) following expenditure: (i) Interest to Bank 7,87,883/- (ii) Processing Charges for BOI 9,00,000/- (iii) Processing charges for SBI 27,54,000/- 44,41,883/- It is also contended that in working out disallowance of Rs. 63,37,826/-, a major part of Rs. 62,48,448/- is relatable to an amount of Rs. 5,20,70,400/-and the same is related to opening debit balance of M/s Rim Jhim Ispath Ltd. of Rs. 4.95 crore and during previous year only Rs. 50 lac was made on 08/05/09 and amount of Rs. 41.5 lac was received on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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