TaxTMI 
TaxTMI 
2016 (8) TMI 1286
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....see explained before the Assessing Officer that the said commission was paid to M/s. Rex Agro Pvt. Limited in respect of sales made to different parties through them. The assessee, however, could not furnish the relevant evidence to prove the genuineness of the commission and also could not furnish the exact details of sales claimed to be made through M/s. Rex Agro Pvt. Limited. The Assessing Officer, therefore, disallowed the claim of the assessee for commission of Rs. 2,50,000/-. 4. On appeal, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on account of commission for the following reasons given in paragraph no. 4.2 of his impugned order:- "4.2 I have heard the contentions raised by the AR of the appellant and the findings of the AO. The disallowance of commission of Rs. 2,50,000/- paid to M/s. Rex Agro Pvt. Ltd. was on account of consultancy and commission for effecting sates. The appellant had made payment of commission by account payee cheque to M/s. Rex Agro Pvt. Ltd. whereby the said payment has been accounted for by M/s. Rex Agro Pvt. Ltd. and shown in its income tax return. It is also noticed that tax has been deducted at source by the appel....
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....se facts of the case, I am of the view that the assessee has not been able to establish on evidence that the expenditure incurred on account of payment of commission in question is wholly and exclusively for the purpose of its business. I, therefore, find no justification in the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of commission and setting aside the same on this issue, I restore that of the Assessing Officer. Ground No. 1 is accordingly allowed. 6. In Ground No. 2, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the disallowance made by the Assessing Officer in respect of payment of salary made by the assessee-firm to its partners. 7. The claim of the assessee for deduction on account of remuneration paid to partners amounting to Rs. 2,40,000/- under section 40A(2)(b) was disallowed by the Assessing Officer on the ground that there was no mention or clause in the Partnership Deed allowing such remuneration. Before the ld. CIT(Appeals), the assessee, however, produced a supplementary deed made on 1st day of April, 2008 incorporating the clause for payment of salary to partners and rely....
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....st purchases and even the advance given to M/s. Raghunath Exports Company was for commercial expediency. The Assessing Officer, however, held that the claim of the assessee of commercial expediency for giving advance to M/s. Raghunath Exports Co. was not properly established. He also found that no advances were given by the assessee against purchases made from unrelated parties while such advances against purchases were given only to the related concerns. Keeping in view these findings as well as other findings recorded by him in the assessment order, the Assessing Officer held that there was a diversion of borrowed funds by the assessee for non-business purpose and the claim of the assessee for deduction on account of interest paid on such borrowed funds amounting to Rs. 29,16,399/- was disallowed by him. 11. The disallowance made by the Assessing Officer on account of interest was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer for the following reasons given in paragraph no.....
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....the mixed account, Therefore. the CIT(A) and the Learned Tribunal both were right in presuming that the advance was made out from the assessee's own fund eligible for the benefit of section 36(1)(iii)". 6.3 The decision of the Punjab & Haryana High Court In the case of CIT.- vs.-Abhishek Industries (Supra) being in contrary to the decision of the Jurisdictional High Court in the case of CIT vs, Britannia Industries l.td. (Supra), the same cannot be accepted and followed and the decision of the Calcutta High Court is to be respectfully followed. In another decision by the Punjab and Haryana High Court In case of CIT vs. Hero Cycles 323 ITR 518 it has been held that where there are mixed funds, presumption is that the investments are made out of own capital. In this decision of the Punjab & Haryana High Court, reliance was placed on CIT vs.- Winsome Textile Industries Limited, wherein decision of Abhishek Industries was distinguished as having no application, The appellant has submitted that the decision of Abhishek Industries Ltd. (Supra) even though not applicable due to the decision of the Calcutta High Court in the case of CIT vs. Britannia Industries Ltd is also distinguishabl....
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....ned advances to its sister concern. On the other hand, the loans taken by the assessee at the relevant time stood only at Rs. 1.65 crores, which were entirely used for the purpose of its business. In my opinion, these facts and figures clearly evident from the relevant balance-sheet of the assessee, which have remained undisputed or uncontroverted by the ld. D.R., are sufficient to show that there was no diversion of borrowed funds by the assessee for non-business purpose and the disallowance made by the Assessing Officer on account of interest was unsustainable. In that view of the matter, I uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of interest and dismiss Ground No. 3 of the Revenue's appeal. 13. In Ground No. 4, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the addition of Rs. 1,16,084/- made by the Assessing Officer being disallowance of 20% out of the business promotion expenses claimed by the assessee. 14. During the course of assessment proceedings, the claim of the assessee for business promotion expenses amounting to Rs. 5,80,241/- was found to be not fully supported by....