AI Drafter 
TaxTMI 
TaxTMI 
2013 (5) TMI 940
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....de by the A.O. on account of interest on interest free loans at the corresponding rate of interest paid by the assessee on his secured/unsecured loan, relying on the Hon'ble Supreme Court's judgement in the case of M/s. S.A. Builders Ltd., Vs. CIT(2007) 288 ITR 1 (SC), where it is held that interest can be allowed as deduction if the payment is made on account of commercial expediency u/s 37 if the I.T. Act. Whereas as per material available on record and reply of the assessee during the assessment proceedings, no commercial expediency reflected in giving interest free advances. 3. Whether the action of Ld. CIT(A), Chandigarh, allowing the claim made by the assessee u/s 54 F of the I.T. Act, 1961 at Rs. 5,67,904/- relying upon the decision of Hon'ble Madras High Court in 181 ITR 101 in the case of CIT Vs. P.V. Narasimhan, is correct. When the judgement relied upon is not of jurisdictional High Court. 4. Ground No.1: After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee has shown agriculture income of Rs. 4,75,827/-. The Assessing Officer informed the assessee that the gross receipts of agricultural produce....
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....ems to be multifold and cannot be treated as a case of shifting of stand. Accordingly, we find nothing wrong in the order of Ld. CIT(A) and confirm the same. 10. Ground No.2 : After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee has given some interest free advances to M/s Chandigarh Cable Pvt. Ltd. On enquiry, it was submitted that advance was given for purchase of land for business purposes as well as for purchase of some materials. Since the land was not registered in the name of assessee till 31.3.2006, the Assessing Officer was of the opinion that ratio of the decision of Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd 288 ITR 1(P&H). would be applicable and accordingly, he disallowed interest @ 10.9% on the amount of advance and added a sum of Rs. 79,364/- as income of the assessee. 11. Before CIT(A), it was mainly submitted that Assessing Officer has not denied that advance was given for purchase of material as well as land. He has made the disallowance merely because land was not registered in the name of the assessee. Details of the advances were also filed before the CIT....
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....p; The above shows that a sum of Rs. 10,94,400/- has been adjusted against purchase of the land and about Rs. 50 lakhs towards purchase of material. As far as advances against material are concerned, the same is for business purposes and, therefore, no disallowance is called for. As far as advance against land is concerned, the interest cannot be allowed in any case not merely because the advance has been given to the sister concern but because the money has been borrowed for the acquisition of fixed assets. After amendment to section 36(1) (iii) it has been made quite clear that interest on the funds borrowed for the purpose of acquisition of assets is not allowable. Accordingly, we set aside the order of CIT(A) and direct the Assessing Officer to confirm the disallowance of interest amounting to Rs. 15,000/- which is approximate amount of interest incurred for the purpose of acquisition of assets. 15. Ground No.3 : After hearing both the parties, we find that assessee has some income from capital gains and against that it was found during assessment proceedings by Assessing Officer that assessee has claimed deduction u/s 54F amounting to Rs. 5,67,904/-. This amount was clai....
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.... 2. a) That the Ld. CIT(A) is not justified in upholding the disallowance of Rs. 73,79,647/- u/s. 40 (a) (ia) under the facts & circumstances of the case. b) That the appellant disputes the quantum of addition made. 3. That the Ld. CIT(A) is not justified in upholding the estimated disallowance out of the following expenses:- i) Car repair and maintenance Rs. 1,00,000/- ii) Telephone Expenses 1/6 th Rs. 47,534/- iii) Car Depreciation 1/6 th Rs. 71,586/- 21. Out of the above grounds, ground No.3 was not pressed, therefore, the same is dismissed. 22. Ground No.1: After hearing both the parties, we find that during assessment proceedings, the Assessing Officer noticed that assessee has given an amount of Rs. 16,10,100/- for purchase of shares to his sister concern M/s Chandigarh Cables Pvt Ltd. According to Assessing Officer, section 14A read with Rules 8D was applicable and accordingly a disallowance of Rs. 32,930/- was made. 23. On appeal, the assessee could not improve his case before the Ld. CIT(A) and addition was confirmed. 24. Before us, Ld. Counsel for the assessee submitted that Rule 8D was not applicable during assessm....