Interest-Free Loan to Managing Partner Disallowed u/s 37(1) Due to Lack of Business Expense Records.

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....Disallowance u/s 37(1) - interest free loan to its Managing Partner - it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. This contention is not acceptable. The assessee has, in fact claimed it as spent for its business purposes only. Further, the amount spent on construction of shed is not available on record. Therefore,we are not inclined to accept this contention of the assessee and therefore, the disallowance u/s. 37(1) of the Act is upheld. - AT....