2026 (3) TMI 955

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....has erred in partly confirming the action of the AO in making disallowance u/s. 36(1)(iii) of the Act amounting to Rs. 9,60,000/- (12% of 80,00,000/-) on account of proportionate interest @ 12% on loans and advances even though no loans were advanced by the assessee in the year under consideration. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in making disallowance u/s. 40(a)(ia) of the Act amounting to Rs. 73,605/-(30% of Rs. 2,45,350/-) on account of non-deduction of TDS by the assessee on training expenses. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in setting aside the matter to the file of AO by ....

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.... is Rs. 43,90,694/-. 4. The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The ld. A.R. submitted that as regards the disallowance u/s. 36(1)(iii) of the Act of Rs. 9,60,000/- on account of proportionate interest at 12% on loans and advances, the ld. A.R. submitted that during the year under consideration, the assessee was having opening balance of loans and advances given to A.M. Enterprises amounting to Rs. 80 lacs out of which assessee received back Rs. 35 lacs from A.M. Enterprise in the year and the balance of Rs. 45 lacs. The said loan was given out of interest free funds. The assessee has stated that the said loan was given out of interest from assets available with the company....

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..... We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee was having the preliminary business of selling vehicles and the assessee company is a dealer for Mahindra Cars and the expenses incurred related to the training of sales and workshop staff of the assessee company is a part and parcel of the said business itself. Therefore, disallowance u/s 40(a)(ia) of the At is not justified. Hence, ground no. 2 is allowed. 11. As regards ground no. 3, the addition of Rs. 2,73,258/- on account of difference in income as per ITR, the ld. A.R. submitted that the method and manner of maintenance of the books of accounts was maintained throughout the years and no discrepancy ....