TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1436
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....assessee. 4. In the background of these facts, we proceed to decide the grounds of appeal as under: 1. "That the Ld. CIT(Appeals) has grossly erred both in law and on facts in partially sustaining the additions/disallowances made by the Ld. Assistant Commissioner of Income Tax, since such additions/disallowances made are wholly unwarranted on facts and in law. 2. That the Ld. CIT(A) has grossly erred in sustaining the disallowance of interest debited in the profit and loss account of Rs. 1,42,376/-, failing to appreciate that aforesaid interest has been paid in respet of loan taken for the purchase of car, and such car has been used for the profession of the appellant and in respect of such car depreciation has also been allowed. 2.1 That the Ld. CIT(A) has erred in failing to appreciate that Ld. ACIT has disallowed the aforesaid interest merely on the ground that appellant has given interest free loans of Rs. 1,16,25,000/- and advance for property of Rs. 1,60,04,301/- failing to appreciate that aforesaid advances has been made by the appellant out of available interest free fund of Rs. 24,89,60,889/- available with the assessee. 2.2 That the Ld. CIT(A) has erred in failin....
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....addition so sustained, is wholly untenable on facts and also in law. 7. That the Ld. CIT(A) has grossly erred in recording adverse findings which are perverse and have been recorded without considering the factual substratum of the case and hence such findings are vitiated and deserves to be deleted. 8. That the Ld. CIT(A) has grossly erred in sustaining the assessment without providing to the assessee, a fair and proper and meaningful opportunity of being heard, thereby violating the principles of natural justice and thus such an order is vitiated both on fact and in law." 5. Ground no. 1 is general and need no adjudication. 6. On ground no. 2 assessee challenged the disallowance of interest of Rs. 1,42,376/-. The AO on perusal of the income and expenditure account of the assessee for the year under consideration noted that assessee has debited interest charges of Rs. 1,42,375.80 on account of car loan. Further, it was observed that assessee had advanced loans and advances to various parties including related parties and no interest is charged. The AO asked the assessee to explain why interest paid on loans should not be disallowed when the assessee was not charging any inte....
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....r under consideration which are to the tune of Rs. 2.98 crores by the assessee. Further, it is not the case of the Ld. Assessing Officer that the car loan was diverted for any other purpose, because there isno denial of the statement of the assessee that the loan amount was directly disbursed to the seller of the car. Inasmuch as the loan was for the purpose of business and no question of diversion of such funds had taken place, merely because the assessee placed his own funds and also the interest free loans for some other purposes, is not open for the Ld. Assessing Officer to disallow the interest on the amount taken for business purpose. We, therefore, direct the Assessing Officer to delete this addition." 10. Copy of the above order is provided to the Ld. DR who did not dispute the same. 11. In view of the above, it is clear that AO disallowed the interest because the issue is similar as has been considered in AY 2009-10. In AY 2009-10 the Tribunal deleted the similar additions. We, therefore, following the reasons for decision for AY 2009-10 (supra) found that issue is covered in favour of the assessee. We, accordingly, set aside the orders of the authorities below and delet....
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.... similar issue was considered by ITAT Delhi 'D' Bench in the case of assessee for AY 2009-10 vide order dated 15.11.2018 (supra) and similar addition has been deleted. The findings of the Tribunal in para 8 of the order above is reproduced as under: "8. We have gone through the findings of the Ld. Assessing Officer on this aspect. Ld. Assessing Officer recorded that the assessee made heavy investments for earning of exempt income and being a busy professional, he requires the management of such a portfolio by incurring expenses, diversion of man-power/staff for indulging in investment activities to various activities like visiting banks, use of vehicle and telephone, use of Internet if portfolio management is web-based, cost of computer and its depreciation, computer operator, consequent electricity, use of office premises, fee charged by mutual fund agents/bankers (annual fee), portfolio record maintenance and its tracking to ensure timely sale/purchase of mutual fund units etc. Except making this statement and reading all the possible expenses that involve in investment process, Ld. Assessing Officer is not specific as to what exactly the probable expenditure in this matter the....
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....the profit and loss account could not be ascertained. AO noted that assessee has claimed telephone and telex, vehicle running and maintenance expenses and depreciation on vehicle in profit and loss account. The total expenses are amounting to Rs. 20,05,388/-. The AO noted that the personal element of these expenses cannot be ruled out. Hence, 1/8th of these expenses was disallowed u/s 37(1) being of personal nature. The AO, therefore, made addition of Rs. 2,50,674/-. The Ld. CIT(A) restricted the addition to 1/10th of the expenses claimed. 20. After considering the rival submission, we are of the view that the entire addition is wholly unjustified. The AO has not pointed out on which items personal element was involved in claiming the aforesaid expenses. AO has not pointed out any specific item which is used by the assessee for personal purposes. It is ad hoc addition made by the AO by disallowing 1/8th out of these expenditures. It is well settled law that ad hoc addition cannot be sustained unless AO has pointed out any specific item in which personal element is involved. There was thus, no justification to make any disallowance out of these expenditures. We, accordingly, set ....
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....he disallowance was not justified. Considering the above findings of Ld. CIT(A) and in the absence of any challenge to the disallowances before CIT(A) as well, we do not find any justification to interfere with the order of Ld. CIT(A) in sustaining the part addition of Rs. 74,438/-. This ground is accordingly, dismissed. 25. On ground no. 6 assessee challenged the order of Ld. CIT(A) in disallowing the Revenue expenses claimed on account of upgradation/ subscription of software amounting to Rs. 9,56,424/-. The AO noted that assessee has debited Rs. 23,91,060/- as software expenses in income and expenditure account. The assessee explained that the assessee incurred software expenses during the year for upgrading integrated software at Chamber at Delhi High Court Office, South Extension Office-cum-residence. Further, the software of latest case laws, posting of judges, benches of various courts, database, appointment and transfer of judges, functioning of various benches, client's database had also been updated. These software are frequently updated and renewed and are not of an enduring nature or benefit. The AO, however, did not accept the contention of the assessee and consider....