2011 (12) TMI 763

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.... 1,61,226/- by Ld. Commissioner of Income Tax (Appeals) on the ground that assessee has made interest free advance of borrowed funds in arbitrary, unjust, unwarranted and at any rate very excessive by wrongly observing that books of the assessee are not proper and do not disclose its full and true income and as such are not reliable. (ii) That the sustaining of disallowance of business development expenses of Rs. 2,13,123/- by Ld. Commissioner of Income Tax (Appeals) is arbitrary, unjust, unwarranted and at nay rate very excessive by wrongly observing that books of the assessee are not proper and do not disclose its full and true income and as such are not reliable. (iii) That the sustaining of disallowance of telephone ex....

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....ee is paying interest on loans taken during the year. From this Assessing Officer inferred that assessee has no interest free funds available to the firm. He found that assessee has not been charging any interest on the advances given, as per the table below:-   Opening balance Debit Credit Closing balance Interest forgone Indian paper and fertilizer (sister concern of the assessee with same address) 2,60,424 1,09,000 2,60,424 1,09,000 21,250 Jagdambay Builders Pvt. Ltd. 1,00,000 Nil Nil 1,00,000 12,500 Mozaic Nil 1,00,000 Nil 1,00,000 11,460 Khanna Farms (sister concern of the assessee) Nil 1,00,000 Nil 1,00,000 11,460     &nbs....

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.... with the firm and interest free advances made during the year. In our considered opinion, the interest of justice will be served, if the matter is remitted to the file of the Assessing Officer to consider the issue afresh. Assessing Officer shall examine the assessee's claim that sufficient interest free funds are available to assessee to give advances to the concerns. Accordingly, the issue stands remitted to the file of the Assessing Officer. 7. Apropos disallowances on account of business development expenses; telephone expenses; electricity and water expenses and disallowance of legal & professional expenses. The Assessing Officer in this case has made the following disallowances on estimate basis :- i) Business development....