2022 (9) TMI 1248

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....est of Rs.9,56,529/- on estimated basis (50% of the total interest of Rs.19,13,058/- claimed in the profit on loss account) ignoring the submissions and evidences placed on record. Thus the addition so made should be deleted. 2. The CIT(A) erred in law and on facts in confirming the disallowance of funeral expenses of Rs.4,000/- incurred to maintain clients relationship as per policy of the assessee. Thus the expenses incurred for business expediency should be deleted." 3. Brief facts of the case are that assessee society is involved in micro finance activities. In the assessment order passed u/s 143 (3) of the Income-tax Act, 1961 (for short 'the Act'), AO made following additions:- Add : 1. Unexplained cash c....

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.... to 9.08 lacs. perusal of the assessment order reveals that an amount of Rs. 19,13,058/- has been debited on account of interest paid under the head 'Micro Finance Activity'. It is seen that the' appellant is paying interest on a higher rate i.e. 11 to 13% on loan taken comparing to the interest received on FDRs which is just 6% p.a. The perusal of the-balance sheet reveals that the FDRs and Cash & Bank balances available with the appellant at the end of the period under consideration was Rs.42,12,119/-. It is, apparent that although the appellant is having spare funds lying idle in the form of cash at bank, and FDRs fresh loans were taken during the year ranging interest @ 11 to 14% p.a. Despite of funds available the term loan....