TaxTMI 
TaxTMI 
2014 (1) TMI 878
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.... That on the facts and circumstances of the case, Ld. CIT(A) has grossly erred in confirming disallowance of Rs.1,26,000/- being notional interest on amount due from Sh.Avinash Kapoor. Disallowance confirmed is illegal and bad in law. b) That on the facts and circumstances of the case, Ld. CIT (A) has grossly erred in confirming disallowance of Rs.1,26,000/- u/s 36(l)(iii) of the Act by holding that decision of Honorable Punjab & Haryana High Court in the case of Abhishek Industries is explicitly applicable to the advances made to Sh. Avinash Kapoor. Conclusion drawn by Ld. CIT (A) is illegal and bad in law. 2. That on the facts and circumstances of the case, Ld. CIT (A) has grossly erred in confirming addition of Rs.32,90,840/- being....
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....Ld. CIT (A) has grossly erred in confirming Worthy A.O's action of invoking provisions of sec. 40(a)(ia) of the Act on interest on unsecured loans which stood paid on 31-03-2009. 5. That on the facts and circumstances of the case, Ld. CIT(A) has grossly erred in confirming disallowance of 1/10th of vehicle and telephone expenses as against disallowance made by Ld.A.O. at 1/8th of vehicle and telephone expenses. Disallowance confirmed is illegal and bad in law. 3. The issue in ground Nos. 1 & 2 raised by the assessee is against the disallowance u/s 36(1)(iii) of the Act. 4. The brief facts of the case are that during the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed interest expenditure ....
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..... 7. We have heard the rival contentions and perused the record. The assessee is admittedly incurring expenditure of interest on borrowed funds. The total interest expenditure debited to the Profit & Loss Account during the year was Rs.54,02,883/-. However, the assessee has also made interest free advances to different parties, on which no interest was being charged and one such advance was to Mr.Avinash Kapoor with whom admittedly there was no commercial transactions. The Ld. AR for the assessee admitted that the said advance was not for commercial purposes. In view of the ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT V Abhishek Industries (supra) we find no merit in the plea of the assessee and disallowance u/s 36(1....
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....ii) of the Act in respect of the investment made with M/s Gian Residency Pvt. Ltd. Applying the abovesaid ratio, we uphold the disallowance of interest u/s 36(1)(iii) of the Act in relation to the investment made by the assessee in share capital of M/s Gian Residency Pvt. Ltd. The Ground No. 2 raised by the assessee is, thus dismissed. 10. The issue in Ground Nos. 3 & 4 raised by the assessee is against the disallowance of interest by invoking the provisions of section 40(a)(ia) of the Act. Admittedly, the assessee had failed to deduct tax at source and deposit the same within the stipulated period and in view thereof, the interest paid to NBFCs totaling to Rs.12,84,325/- and Rs.150,671/- on unsecured loans was disallowed by the Assessin....
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....the same within the specified period, the expenditure relatable to such deduction of tax at source would not be allowed as deduction, while computing the income of the assessee. Admittedly in the facts of the present case the assessee was liable to deduct tax at source in respect of the interest paid to NBFCs totaling Rs.12,84,325/- and also interest paid on unsecured loans totaling Rs.150,671/-. We uphold the orders of the authorities below in this regard. We do not find any merit in the alternate plea raised by the ld. AR for the assessee that the disallowance of notional interest u/s 36(1)(ii) of the Act and the disallowance of interest in view of section 40(a)(ia) of the Act results in double addition. The total interest expenditure cla....