TaxTMI 
TaxTMI 
2016 (6) TMI 330
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....40,369/- on account of utilizing cash available in hand for non business purposes and hence payment made for Bank Limit whereas according to assessee the carrying & conduct of the business and business affairs as a prudent businessman cannot be objected by the respondent. 4. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of Rs. 50,000/- on account of low House hold expenses. 5. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for having disallowed freight expenses of Rs. 2,35,804/- u/s 40(a)(ia) of the Act on account of TDS not deducted u/s 194C (5) of payment made to Transporters. 6. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of Rs. 3,44,530/- on account of payments exceeding Rs. 20,000/- made in cash u/s40A(3) of the Act whereas according to assessee, the payments are covered under Rule 6DD(g) of the Act. 6a). Because the findings of Ld. CIT (A) are being challenged on facts and Law, for making addition of Rs. 12,02,512/- on account of variation in the value of closing stock between the value declared in the accounts and the value declared to the ....
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....e advance was charged although the assessee claimed expenses of Rs. 2,64,369/- by way of interest on the funds borrowed from the bank and whereas on the other hand interst free advance was made to Shri Deepak Mehla. The Assessing Officer draws the inference that the interest bearing borrowed funds were not utilized for business purposes only and a part of it was diverted for making interest free advances. Therefore, the Assessing Officer held that interest attributable to the advance of Rs. 2 lacs for the period 01.04.2008 to 31.03.2009 @ 12% per annum works out to Rs. 24,000/- and is disallowed out of interest claimed in view of Section 36(1)(ii) and also the ratio of judgment of Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries and accordingly disallowed Rs. 24,000/-. 5. The assessee claimed expenditure of Rs. 2,64,369/- by way of interest paid to Canara Bank on cash credit limit. The assessee produced the cash book during the course of assessment proceedings. The Assessing Officer observed that on the dates when the cheques were issued to the parties, the assessee had sufficient cash-in-hand and there could be no business expediency in making over-draft fro....
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....8. The Assessing Officer further observed that the assessee incurred expenditure in cash exceeding Rs. 20,000/- in violation of provisions of Section 40A(3) of the Act in respect of freight expenses. Since the assessee could not give any explanation the said payments made in cash was held in violation of Section 40A(3) of the Act or exceptions provided under Rule 6DD of the Income Tax Rules. Accordingly, disallowed the expenditure to Rs. 3,44,530/-. 9. The Assessing Officer while going through the trading account filed along with the return, noticed that the assessee has shown value of closing stock at Rs. 63,63,113/-. As per Annexure I enclosed with the Audit Report, the assessee furnished quantity- wise details of closing stock along with valuation. During the year, the assessee was having cash credit limit from Canara Bank against hypothecation of stock where the amount payable to bank as on 31.03.2009 was shown at Rs. 51,94,891/-. As the amount payable to the bank by the assessee was more than 50 lacs enquiries were made from the Canara Bank, Karnal u/s. 133(6) of the Act and Banking authorities were requested to provide the copy of stock statements filed by the assessee as on....
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.... along with the loans statement for the period 1/4/2008 to 31/3/2009 was produced before the Assessing Officer as well as CIT (A). Both the authorities failed to take cognizance of the said loan statement. It is not in dispute that the loan was taken for business purpose. The money was also advanced for business purpose. Hence the disallowance is bad in law. Ground No. 2 is allowed. 13. Ground No.3 relates to disallowance of interest on account of not utilizing cash available in hand for business purposes and resorting to payment from bank cash credit limit. The CIT (A) has simply stated that there was no evidence produced by the assessee. We find that there is no merit in the disallowance. The said statement is incorrect. It is not for the Assessing Officer to decide how an assessee can use a cash credit limit with the Bank. Hence, Ground No. 3 is allowed. 14. Ground No.4 relates to whether the assessee has given proper reasoning before the authorities regarding house hold expenses. We find that Rs. 90,000/- is not a reasonable amount for monthly expenses of any person and his family. The addition in our view is not warranted. Ground No. 4 is allowed. 15. Ground No. 5 relates t....