TaxTMI 
TaxTMI 
2017 (12) TMI 798
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....ion and for various other reasons and hence the same may kindly be quashed. 2. Rs. 10,54/-: The ld CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the disallowance of Rs. 14,054/- on account of Vehicle Expenses. Hence the disallowance so made by the AO and partly confirmed by the CIT(A) is being absolutely, contrary to the provisions of law and facts of the case and not in conformity with the law, hence the same kindly be deleted in full. 3. Rs. 1,53,469/-: The ld CIT(A) has grossly erred in law as well as on the facts of the case in confirming the disallowance of Rs. 1,53,469/- on account of interest on the loan of funds given to the sister concern. Hence the disallowance so made by the A....
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....essed. 3. Ground No. 2 is regarding disallowance of vehicle expenses. The assessee engaged in the business of trading/dealership of Oswal soap, godfrey, Philip and other MFG products. During the course of assessment proceedings, the AO noted that the assessee has debited the expenses of Rs. 1,40,542/- on account of vehicle running and maintenance expenses. Apart from these the other expenses are insurance Rs. 43,124/-, staff welfare Rs. 25,505/-, salary expanses Rs. 6,60,000/- and godown rent Rs. 60,000/- etc. The AO has further noted that no bills or supporting documents are being maintained by the assessee in this regard though the expenses incurred are in cash payment. Accordingly, the AO asked the assessee as to why these expenses sh....
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....ven loan sister concern M/s Subhash Enterprises, which was outstanding to the extent of Rs. 5,61,000/- at the end of the year and no interest was charged on such loan. The AO was not satisfied with the reply of the assessee and made disallowance of Rs. 1,53,469/- on account of proportionate net interest on the loan given to the sister concern. The assessee challenged the action of the AO before the ld. CIT(A) and contended that the assessee is having its own interest free funds of Rs. 1,12,25,617/- out of which Rs. 21,97,568/- is assessee's own capital and Rs. 3,20,000/- interest free loans and balance is current liability as on 31.03.2011. The ld. CIT(A) has not accepted this contention of the assessee and given a finding that the interest....
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....r commercial expediency and further the ld. CIT(A) has given finding that the assessee has used the borrowed fund for giving the advance to the sister concern. He has relied upon the authorities below. 8. I have considered the rival submissions as well as relevant material on record. Though the assessee has availed the cash credit facility as well as overdraft facility from ICICI Bank on which interest of Rs. 8,24,998/- was paid during the year under consideration however, neither the Assessing Officer nor the ld. CIT(A) has verified this fact that when the assessee is having its own sufficient funds to give advance to the sister concern then without establishing a direct nexus between the borrowed fund and advance no disallowance on acc....