TaxTMI 
TaxTMI 
2016 (5) TMI 411
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....iesel, tour and traveling and depreciation on car. 2. On the facts and in the circumstances of the case the ld. CIT (A) has grossly erred in sustaining the disallowance of interest made by the ld. AO by alleging that investment made in purchase of land is not yielding income to the assessee without appreciating the fact that the land was purchased for business purpose for construction of factory and godown and further without establishing the nexus between borrowed funds and investment by the assessee, therefore disallowance so sustained deserves to be deleted. 3. On the facts and in the circumstances of the case the ld. CIT (A) has grossly erred in sustaining the disallowance of brokerage on finance made by the ld. AO wit....
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.... same was paid on the gross value of borrowed funds and not on the interest paid. The ld. CIT (A) though uphold the disallowance, however, restricted the same to the period from the date of purchases of land to the end of the financial year and interest rate is reduced from 18% to average rate of interest paid on borrowed funds. 4. Aggrieved, the assessee is before us. 4.1. The ld. A/R for the assessee contends that the allegation of ld.AO that the borrowed funds have been utilized in purchasing the land in question is without any basis in view of the fact that the assessee already had sufficient funds available with her to pay the consideration for the purchase of said land which was purchased for business purposes only. He submitted....
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....its 10,79,923 10,71,604 Unsecured Loans 3,68,59,721 5,68,84,875 Current Assets 11,07,76,580 17,64,17,110 Current Liabilities 45,75,266 3,30,67,613 VAT, statutory and other business advances 65,64,104 2,52,85,033 Besides this, the ld. A/R submitted that the turnover of the appellant was increased from Rs. 90.94 crore to Rs. 100.08 crore. He further submitted that from the above table it is quite evident that against the total borrowed funds of Rs. 14.38 crores, the current assets are 17.64 crores. Further, the borrowed funds to the tune of Rs. 8.90 crores were brought forward from the preceding year and were already applied in the business. The increase in the borrowed funds are also applied in th....
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.... rival contentions and perused the material available on record. It has not been disputed that assessee had own capital of Rs. 3.04 crores in the books of account. The adhoc disallowance of interest and brokerage on finance has been made mainly on the following two issues :- (1) The land purchased was not for the purpose of business. (2) Since the borrowed funds were utilized in these years, therefore, it cannot be assumed that own capital of the assessee was utilized for acquisition of the land in question. Therefore, the proportionate interest and brokerage on finance should be disallowed. The ld. Counsel for the assessee on the other hand contends that the investment in question has been shown in the assessee's balan....