TaxTMI 
TaxTMI 
2014 (1) TMI 881
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....under sec.36(1)(iii) of Rs.92,17,379/- 2. The C..I.T.(Appeals) further erred in upholding the disallowance of depreciation and interest on vehicles of Rs.6,47,061/- 3. The C.I.T.(Appeals) ought not to have disallowed an amount of Rs.60,000/- under sec. 40(a)(ia). 4. The C.I.T.(Appeals) further erred in disallowing an amount of Rs.24,190/- under sec.41(1) of the Act. 5. The C.I.T.(Appeals) erred in upholding the charging of interest under sec. 234A and 234B of the Act." 2. At the outset, ground No. 3 and 4 are not pressed by Ld. counsel for the assessee and ground No.5 is consequential. Therefore, grounds No. 3 and 4 are dismissed as not pressed and ground No.5 being consequential in nature and does not require any adjudicatio....
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.... that if the assessee has sufficient interest free funds then it is presumed that the advances are made out of interest free funds. He placed reliance on the judgment of Hon'ble Supreme Court rendered in the case of Munjal sales Corporation v. CIT (2008) 298 ITR 298 (SC) as well as judgment of Reliance Utility and the judgment of Hon'ble Karnataka High Court rendered in the case of CIT v. Sridev Enterprises (1991) 192 ITR (165) (Kar). Ld. AR reiterated the submission made before the authorities below. On the contrary, Ld. SR-DR of the Revenue strongly supported the orders of authorities below. He submitted that the disallowance as well as confirmation is justified. He submitted that Assessing Officer has observed that as per assessee's own ....
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....ng the year. We find that the Ld. CIT(A) has observed that Assessing Officer has disallowed the interest expenses incurred by the assessee on borrowings for the business as it was noted by him that certain non-interest bearing advances have been given out of interest bearing funds. It was held by him that assessee could not prove any nexus between interest free funds and the advances. It was further observed by the AO that since the advances have been given for purchasing for land for future project, the interest related to such loan should be capitalized. Ld. CIT(A) confirmed the disallowance on the basis that the AO had given a finding that assessee could not give the fund flow position to establish its claim that advances were given from....
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.... assessee is required to capitalize the interest expenses. At one hand, the AO as well as Ld. CIT(A) have given a finding that non-interest bearing advances were given out of interest bearing fund and it was also observed that assessee could not prove the nexus between the interest free funds and advances. The reasoning far disallowance is self-contradictory. Therefore the facts of the present case, we are of the considered view that the disallowance made by the Assessing Officer and confirmed by Ld. CIT(A) is not justified. In view of the fact that assessee has pointed out that it has sufficient interest free fund and this is not contradicted by the authorities below even before the Tribunal no material has been placed on record suggesting....
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....ot the owner but disallowance was also made on the basis that the assessee could not give details in support of its claim that the vehicles were utilized only for the purpose of assessee's business. 8. We have heard the rival submissions and perused the materials available on record. Before Ld. CIT(A) the contention of assessee was also that such expenditure was allowed in earlier year. The factum that such expenditure was allowed in earlier year is not contradicted by the Revenue. As per the Section 32(1) of the Act depreciation is allowable if the machinery is owned wholly and partly by the assessee, however, the Hon'ble Supreme Court has further enlarged this scope of word "own" in its judgment rendered in the case of Mysore Minerals ....