Sh. Pawan Aggarwal, Ambala City V. DCIT, Ambala

ITA 152/CHANDI/2011

• Counselvise Citation: 15221514 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINIAKHILESH GUPTA
• Assessee Lawyers: H P JINDAL
• Keywords: Business expenditure; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.152/CHD/2011 (ASSESSMENT YEAR : 2005-06) SH.PAWAN KUMAR AGGARWAL, VS. THE D.C.I.T., 376, SEC-7, AMBALA. AMBALA CITY. PAN: AAACY1353R AND ITA NO.333/CHD/2010 (ASSESSMENT YEAR : 2006-07) THE D.C.I.T., VS. SH.PAWAN KUMAR AGGARWAL, AMBALA. 376, SEC-7, AMBALA CITY. PAN: ACIPA9659B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI H.P.JINDAL DEPARTMENT BY : S/SHRI N.K.SAINI/AKHILESH GUPTA, DR DATE OF HEARING : 22.03.2012 DATE OF PRONOUNCEMENT : 03.05.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEALS FILED BY ASSESSEE AND THE REVENUE ARE A GAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX(A PPEALS), PANCHKULA DATED 16.11.2010 AND 25.01.2010 RELATING TO ASSESSM ENT YEARS 2005-06 AND 2006-07 AGAINST THE ORDERS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH THE APPEALS FILED BY THE ASSESSEE AND THE R EVENUE INVOLVING SIMILAR ISSUE BUT RELATING TO DIFFERENT ASSESSMENT YEARS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE ASSESSEE IN ITA NO.152/CHD/2011 HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CLT(APPEALS) IS NOT JUSTIFIED IN UPHOLDING DISALLOWENCE OF INTEREST ON THE CAPITAL INVESTEDBYTHEASSESSESIN OTHER PARTNERSHIP FIRMS. 2. THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN UPHOLDINGDISALLOWENCE OF RS.60000/- ON ACCOUNT OF INTERESTCHARGEABLEONACCURAL BASIS ON DEBIT BALANCE OF RS.5 LACS IN THE NAME OF SMT. SHUBH LATA @ 12% P.A. 3. THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN UPHOLDING DISALLOWENCE OUT OF SALARY RS. 80600/- AS 10% SALARY OF RS. 806000/- 4. THE LEARNED CLT(APPEALS) IS NOT JUSTIFIED IN UPHOLDING DISALLOWENCE OF OUT OF TELEPHONE EXPENSES RS. 3818/- AS 1/5TH OF 190937- ON ACCOUNT OF PERSONAL U SE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PROPRIETOR AND IS CARRYING ON THE BUSINESS OF FINANCING. DURING T HE YEAR UNDER CONSIDERATION THE ASSESSEE HAD DECLARED GROSS INTER EST OF RS.29,59,600/- AND NET INTEREST OF RS.8,15,517/-. IN ADDITION THE ASSESSEE HAD SHOWN RENTAL INCOME OF RS.4,93,910/- AND INCOME FROM CAPI TAL GAINS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FROM THE PERUSAL OF THE BALANCE SHEET NOTED THAT THE ASSESSE E HAD MADE INVESTMENTS IN FOUR PARTNERSHIP FIRMS TOTALING RS.1 .18 CRORES. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD NOT R ECEIVED INTEREST ON THE ABOVE SAID CAPITAL CONTRIBUTION MADE BY THE ASS ESSEE, THOUGH IN THE PARTNERSHIP DEED INTEREST @ 12% ON CAPITAL CONTRIBU TION WAS PROVIDED. THE ASSESSEE HAS RAISED UNSECURED LOANS OF RS.87,58 ,134/- DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD PAID IN TEREST OF RS.8,43,943/- ON TOTAL LOANS OUTSTANDING OF RS.1,75 ,98,135/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DI VERTED THE FUNDS FOR NON PROFITABLE ADVENTURE AND CONSEQUENTLY INTEREST OF RS.8,43,943/- WAS DISALLOWED IN VIEW OF THE RATIO LAID DOWN BY THE HO N'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ABHISHEK INDUSTRIES L TD. [286 ITR 3 1(P&H)]. FURTHER THERE WAS DEBIT BALANCE OF RS.5 L ACS IN THE NAME OF SMT.SHUBH LATA, FROM WHOM NO INTEREST WAS CHARGED. INTEREST @ 12% PER ANNUM ON DEBIT BALANCE OF RS.5 LACS AMOUNTING T O RS.60,000/- WAS ADDED AS INCOME OF THE ASSESSEE ON ACCRUAL BASIS. FURTHER THE ASSESSEE DEBITED SUM OF RS.8,06,000/- ON ACCOUNT OF SALARY. THE ASSESSEE WAS NOT MAINTAINING ANY SALARY/ATTENDANCE REGISTER AND CONS EQUENTLY 1/10 TH OF THE EXPENDITURE WAS DISALLOWED TO COVER EXCESSIVE AND I NADMISSIBLE SALARY EXPENDITURE. DISALLOWANCE OF RS.80,600/- WAS MADE O N THIS ACCOUNT. FURTHER DISALLOWANCE OF 1/5 TH OF TELEPHONE EXPENSES WAS MADE BY THE ASSESSING OFFICER. 5. BEFORE THE CIT (APPEALS) THE PLEA OF THE ASSESSE E WAS THAT OUT OF THE FOUR CONCERNS IN WHICH THE ASSESSEE HAD MADE IN VESTMENTS, ONE WAS ITS PROPRIETARY CONCERN. THE ASSESSEE ELABORATELY EXPLAINED THE NATURE OF BUSINESS OF EACH OF THE PARTNERSHIP FIRMS IN WHICH IT HAD MADE THE INVESTMENTS AND ALSO POINTED OUT THAT THE SAID FIRM S IN TURN HAD MADE INVESTMENT IN PROPERTIES AGAINST WHICH HE HAD EARNE D HIS SHARE OF CAPITAL GAINS IN THE SUCCEEDING YEAR/S. THE EXPLANATION OF THE ASSESSEE BY WAY OF WRITTEN SUBMISSIONS IS INCORPORATED UNDER PARA 4 .1 AT PAGES 4 TO 7 OF THE APPELLATE ORDER. THE ASSESSEE FURTHER BROUGHT ON RECORD THE FACTUAL ASPECTS OF THE CASE BEFORE THE CIT (APPEALS) AND AL SO POINTED OUT THAT IT HAD SUFFICIENT CAPITAL OUT OF WHICH IT HAD MADE INV ESTMENT IN THE CAPITAL OF THE FIRM/S AND ALSO GIVEN INTEREST FREE ADVANCES TO THE FAMILY MEMBERS. THE CIT (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE INVESTMENT IN THE PARTNERSHIP FIRM. HOWEVER, THE CIT (APPEALS) DELETED THE DISALLOWANCE OF INTEREST TO T HE EXTENT OF INTEREST FREE ADVANCES TO THE PROPRIETARY CONCERN OF THE ASS ESSEE. THE SECOND PLEA OF THE ASSESSEE THAT THE AVERAGE RATE OF INTER EST PAID BY HIM BEING 4.8% AND DISALLOWANCE AT 12% WAS EXCESSIVE, WAS ALS O REJECTED BY THE 4 CIT (APPEALS). FURTHER ADDITION OF RS.60,000/- ON ACCOUNT OF ADVANCE TO SMT.SHUBH LATA WAS ALSO CONFIRMED BY THE ASSESSEE. THE DISALLOWANCE OUT OF SALARY AND TELEPHONE EXPENDITURE WAS ALSO UP HELD BY THE CIT (APPEALS). 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C IT (APPEALS). SHRI H.P.JINDAL APPEARED FOR THE ASSESSEE AND S/SHRI N.K .SAINI AND AKHILESH GUPTA PUT IN APPEARANCE ON BEHALF OF THE REVENUE AN D PUT-FORWARD THEIR CONTENTIONS. 7. THE ASSESSEE VIDE GROUND NO.1 HAS RAISED THE ISS UE IN RELATION TO THE DISALLOWANCE OF INTEREST ON CAPITAL INVESTED BY THE ASSESSEE IN OTHER PARTNERSHIP FIRMS. THE ASSESSEE HAS PLACED ON RECO RD BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER APPEAL AT PAGES 1 TO 5 OF THE PAPER BOOK. THE ASSESSEE IS A SOLE PROPRIETOR OF H IS CONCERN M/S YASHIK FINANCE COMPANY. THE PERUSAL OF THE BALANCE SHEET PLACED AT PAGE 1 OF THE PAPER BOOK REFLECTS THAT THE ASSESSEE HAD CAPIT AL BALANCE OF RS.1,24,75,916/-, IN ADDITION TO PROFIT FOR THE FIN ANCIAL YEAR 2004-05 OF RS.8,15,516/-. THE SUNDRY CREDITORS AS ON 31.3.200 5 WERE RS.1.75 CRORES OUT OF WHICH AS POINTED OUT BY THE ASSESSING OFFICE R, LOANS AGGREGATING TO RS.86,58,134/- WERE RAISED DURING THE YEAR. THE ASSESSEE HAD PAID INTEREST OF RS.8,43,943/- ONLY. THE ASSESSEE, ON T HE OTHER HAND, HAD MADE INVESTMENT IN UNDERMENTIONED CONCERNS DURING T HE YEAR UNDER CONSIDERATION: NAME AMOUNT WITHDRAWN A) M/S VINOD KUMAR & OTHERS 82,00,000/- B) M/S RISHI PAL & OTHERS 9,47,850/- C) M/S PAWAN AGGARWAL & OTHERS 10,32,400/- D) M/S K.G.ASSOCIATES 2,00,000/- 5 8. THE CONCERN M/S PAWAN AGGARWAL & OTHERS WAS THE SOLE PROPRIETARY CONCERN OF THE ASSESSEE. THE CIT (APPE ALS) HAS DELETED THE INTEREST ATTRIBUTABLE TO THE AMOUNT ADVANCED TO THE SAID SOLE PROPRIETARY CONCERN. THE INTEREST EXPENDITURE CLAIMED BY THE A SSESSEE AT RS.8,43,943/- WAS DISALLOWED BY THE ASSESSING OFFIC ER BECAUSE OF THE AFORESAID ADVANCES MADE BY THE ASSESSEE TO THE ABOV E SAID CONCERNS AS HIS CAPITAL CONTRIBUTIONS. 9. LOOKING AT THE FACTS OF THE PRESENT CASE WE FIND THAT THE TOTAL CAPITAL AVAILABLE WITH THE ASSESSEE WAS RS.1.24 CRO RES OUT OF WHICH HE HAD MADE THE INVESTMENT IN THE OTHER FIRMS AT RS.1. 08 CRORES I.E. EXCLUDING THE INVESTMENT IN SOLE PROPRIETARY CONCER N AT ABOUT RS.10 LACS. THE SAID ENTRIES ARE REFLECTED IN THE BALANCE SHEET OF THE SOLE PROPRIETARY CONCERN OF THE ASSESSEE. HOWEVER, THE SAME DOES NOT DISPEL THE CLAIM OF THE ASSESSEE THAT IT HAD SUFFICIENT CA PITAL AVAILABLE WITH IT TO MAKE THE AFORESAID INVESTMENTS IN THE PARTNERSHIP F IRMS. IN ADDITION, THE ASSESSEE HAD INTEREST FREE DEPOSITS OF RS.75,73,840 /- OUT OF TOTAL UNSECURED LOAN OF RS.1.75 CRORES. THE SAME IS FURT HER PROVED BY THE FACT THAT ON TOTAL LOAN OF RS.1.75 CRORES, INTEREST OF O NLY RS.8,43,943/- HAS BEEN PAID BY THE ASSESSEE. THE NEXT ASPECT TO BE C ONSIDERED IN THE PRESENT CASE IS THAT THE ASSESSEE HAD EARNED INTERE ST INCOME OF RS.29,59,600/-, AGAINST WHICH IT HAD PAID INTEREST OF RS.8,43,943/- ONLY WHICH EARNED NET INTEREST OF RS.21,15,667/-. 10. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES WHERE THE ASSESSEE HAD SUFFICIENT OWN CAPITAL OF ABOUT RS.1.2 4 CRORES, INTEREST FREE LOANS ABOUT RS.75.73 LACS AGAINST WHICH IT HAD MADE INVESTMENT IN THE PARTNERSHIP FIRMS TOTALING RS.1.18 CRORES. THE SAI D INVESTMENT IN THE PARTNERSHIP CONCERNS BEING MADE FOR THE PURPOSES OF CARRYING ON THE BUSINESS BY THE ASSESSEE IN PARTNERSHIP WITH OTHER FIRMS AND SUCH 6 INVESTMENT IN THE CAPITAL ACCOUNT OF THE SAID PARTN ERSHIP FIRMS WAS CASE OF COMMERCIAL EXPEDIENCY IN THE HANDS OF THE ASSESS EE. IN THE ALTERNATE, WHERE THE ASSESSEE HAD SUFFICIENT OWN CAPITAL SUCH INVESTMENT IN THE CAPITAL OF THE PARTNERSHIP FIRMS OUT OF THE OWN CAP ITAL COULD NOT BE COMPARED WITH INTEREST FREE ADVANCES MADE OUT OF TH E INTEREST BEARING LOANS. AS POINTED OUT IN THE PARAS HEREINABOVE, OU T OF THE INTEREST BEARING LOANS RECEIVED BY THE ASSESSEE, TOTAL INTER EST OF ONLY RS.8,43,943/- WAS PAID. THE ASSESSEE IS IN THE BUS INESS OF FINANCING AND HAD EARNED TOTAL INCOME OF RS.29,59,600/-. THE SAI D INTEREST EXPENDITURE INCURRED BY THE ASSESSEE DURING THE PREVIOUS YEAR, WHO IN TURN IS CARRYING ON THE BUSINESS OF FINANCING IS CLEARLY AT TRIBUTABLE TO THE CARRYING ON THE BUSINESS AND IS TO BE ALLOWED AS BU SINESS EXPENDITURE IN THE HANDS OF THE ASSESSEE. THERE IS NO MERIT IN TH E ORDER OF THE ASSESSING OFFICER IN APPLYING THE RATIO LAID DOWN B Y THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ABHISHEK INDUSTRIES LTD.(SU PRA) TO THE FACTS OF THE PRESENT CASE AND DISALLOWING THE EXPENDITURE UN DER SECTION 36(1)(III) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING O FFICER TO ALLOW THE INTEREST EXPENDITURE OF RS.8,43,943/- IN THE HANDS OF THE ASSESSEE. 11. IN THE ALTERNATIVE, IT MAY ALSO BE BROUGHT ON R ECORD THAT THE INVESTMENT MADE BY THE ASSESSEE BY WAY OF CAPITAL C ONTRIBUTION IN CAPITAL CONCERNS WAS A CASE OF COMMERCIAL EXPEDIENC Y IN THE HANDS OF THE ASSESSEE AND IS COVERED BY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN S.A. BUILDERS LTD. VS. CIT [288 IT R 1 (SC)], WHEREIN IT HAS BEEN HELD AS UNDER: 25. THE EXPRESSION 'COMMERCIAL EXPEDIENCY' IS AN EXPRE SSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUD ENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBLIGATI ON, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE, IF IT WAS I NCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. 7 12. IT HAS BEEN FURTHER HELD AS UNDER: 34. WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIG H COURT IN CIT V. DALMIA CEMENT (BHARAT) LTD. [2002] 254 ITR 377 2 THAT ONCE IT IS ESTABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPEND ITURE AND THE PURPOSE OF THE BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENUE CANNO T JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINES SMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE R OLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. NO BUSINESSMAN CAN BE CO MPELLED TO MAXIMIZE ITS PROFIT. THE INCOME TAX AUTHORITIES MUS T PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOO K AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUD ENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SE E THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONCERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. 35. WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OP INION THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADVANCES IT TO A SISTER CONCERN. IT ALL DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE RESPECTIVE CASE. FOR INSTANCE, IF THE DIRECTORS OF THE SISTER CONCERN UTILIZE THE AMOUNT ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT, OBVIOUS LY IT CANNOT BE SAID THAT SUCH MONEY WAS ADVANCED AS A MEASURE OF C OMMERCIAL EXPEDIENCY. HOWEVER, MONEY CAN BE SAID TO BE ADVANC ED TO A SISTER CONCERN FOR COMMERCIAL EXPEDIENCY IN MANY OT HER CIRCUMSTANCES (WHICH NEED NOT BE ENUMERATED HERE). HOWEVER, WHERE IT IS OBVIOUS THAT A HOLDING COMPANY HAS A DE EP INTEREST IN ITS SUBSIDIARY, AND HENCE IF THE HOLDING COMPANY AD VANCES BORROWED MONEY TO A SUBSIDIARY AND THE SAME IS USED BY THE SUBSIDIARY FOR SOME BUSINESS PURPOSES, THE ASSESSEE WOULD, IN OUR OPINION, ORDINARILY BE ENTITLED TO DEDUCTION OF INT EREST ON ITS BORROWED LOANS. 13. THUS WE ALLOW THE CLAIM OF THE ASSESSEE IN RESP ECT OF INTEREST EXPENDITURE OF RS.8,43,943/- IN ENTIRETY THOUGH THE CIT (APPEALS) HAD ALLOWED PARTIAL RELIEF IN THE HANDS OF THE ASSESSEE , AGAINST WHICH THE REVENUE IS NOT IN APPEAL. GROUND NO.1 RAISED BY THE ASSESSEE IS THUS ALLOWED. 14. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF THE ASSESSING OFFICER IN CHARGING INTEREST ON ACCRUAL BASIS ON ADVANCE OF RS.5 LACS. MADE BY THE ASSESSEE TO SMT.S HUBH LATA. IT MAY BE APPRECIATED THAT THE ADDITION HAS BEEN MADE IN T HE HANDS OF THE 8 ASSESSEE FOR NON-CHARGING OF INTEREST ON INTEREST F REE ADVANCES MADE BY HIM TO SMT.SHUBH LATA. IN VIEW OF OUT FINDINGS IN THE PARAS HEREINABOVE WHEREIN THE ASSESSEE HAD SUFFICIENT NON-INTEREST BE ARING FUNDS, THE SAID ADDITION IS NOT WARRANTED IN THE HANDS OF THE ASSES SEE. IT MAY ALSO BE BROUGHT ON RECORD THAT THE CASE OF THE REVENUE IS N OT IN RESPECT OF DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) O F THE ACT FOR MAKING INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUND S, BUT IS THE CASE OF CHARGING ACCRUED INTEREST ON INTEREST FREE ADVANCES MADE BY THE ASSESSEE. WE FIND NO MERIT IN THE AFORESAID ADDITION OF RS.60 ,000/- AND THE SAME IS DIRECTED TO BE DELETED. 15. GROUND NO.3 RAISED BY THE ASSESSEE IS IN RESPEC T OF DISALLOWANCE OF 10% OF SALARY EXPENDITURE FOR WANT OF SALARY/ATTEND ANCE REGISTER. TOTAL SALARY PAID BY THE ASSESSEE WAS RS.8,06,000/-. THE ASSESSEE HAD MAINTAINED INTERNAL VOUCHERS IN RESPECT OF SAID SAL ARY EXPENDITURE. IN VIEW OF THE FACTS OF THE PRESENT CASE WHERE THE ASS ESSEE HAD MAINTAINED THE SALARY VOUCHERS WHICH IN TURN WERE SIGNED BY TH E PERSON RECEIVING THE SALARY, WE FIND NO MERIT IN DISALLOWING 10% OF THE SALARY EXPENDITURE. ACCORDINGLY, THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE IS ALLOWED. 16. GROUND NO.4 RAISED BY THE ASSESSEE IS NOT PRESS ED AND HENCE DISMISSED. 17. THE REVENUE IS IN APPEAL IN ITA NO.333/CHD/2010 AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.10,86,697/- IGNORING THE FACT THAT THE INVESTMENT IN OTHER FIRM VIZ. M/S PAWAN AGGARWAL & OTHER AND M/S RISHI PAL & OTHERS AT RS.71,83,000/- AND RS.18,71,938/- RESPECTIVELY, 9 WAS NOT FOR THE PURPOSE INCIDENTAL TO THE BUSINESS OF FINANCING RUN BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.73,600/- OUT OF SALARY WITHOUT APPRECIATING THE FACT THAT THE MAJOR PORTION OF SALARY HAS BEEN PAID IN CASH AND IN THE ABSENCE OF PROPER SALARY/ATTENDANCE REGISTERS, THE EXPENSES INCURRED UNDER THIS HEAD WERE NOT AMENDABLE TO VERIFICATION 18. THE ONLY ISSUES ARE IN RESPECT OF THE DISALLOWA NCE OF INTEREST AMOUNTING TO RS.10,86,696/- AND DISALLOWANCE OF SAL ARY EXPENDITURE OF RS.73600/-. THE ISSUE RAISED IN THE PRESENT APPEAL BY THE REVENUE AGAINST THE ORDER OF CIT (APPEALS) IN ALLOWING THE CLAIM OF ASSESSEE IS IDENTICAL TO THE ISSUES RAISED BY THE ASSESSEE IN I TS APPEAL IN ITA NO.152/CHD/2011. IN LINE WITH OUR ORDER IN THE PAR AS HEREINABOVE WE UPHOLD THE ORDER OF CIT (APPEALS) IN RESPECT OF CON CISE GROUNDS OF APPEAL NO.1 RAISED BY THE REVENUE AGAINST DISALLOWA NCE OF INTEREST AMOUNTING TO RS.10,86,693/-. SIMILARLY, THE SECOND ISSUE RAISED BY THE REVENUE IN RESPECT OF ALLOWANCE OF TOTAL SALARY EXP ENDITURE HAS BEEN ALLOWED BY THE CIT (APPEALS) IN VIEW OF THE PAYMENT VOUCHERS PRODUCED BEFORE THE CIT (APPEALS). WE UPHOLD THE ORDER OF T HE CIT (APPEALS) IN THIS REGARD. CONSEQUENTLY, GROUND NOS.1 AND 2 RAIS ED BY THE REVENUE ARE DISMISSED. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DAY OF MAY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD MAY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 10