Srichand G. Galani, Pune V. Deputy Commissioner of Income-tax,

ITA 342/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7109 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: V L JAIN
• Keywords: Business income; Depreciation; Principle of natural justice; Bad and doubtful debts; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 342 /P U N/201 5 / ASSESSMENT YEAR : 20 08 - 09 MR. SRICHAND G. GALANI, 1088/A/3, RAVIWAR PETH, MANISH MARKET, PUNE - 411002 PAN : ABJPG4152H ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5, PUNE / RESPONDENT ASSESSEE BY : S HRI V.L. JAIN REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 11 - 09 - 2017 / DATE OF PRONOUNCEMENT : 08 - 1 2 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 4, PUNE DATED 11 - 02 - 2015 FOR THE ASSESSMENT YEAR 20 08 - 09 . 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESALE AND RETAIL TRADING IN 2 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 TEXTILES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 - 09 - 2008 DECLARING TOTAL INCOME OF RS. 84,44,240/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, N OTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 28 - 08 - 2009. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE ADDITIONS/DISALLOWANCES INTER ALIA ON FOLLOWING COUNTS : I. BAD DEBTS WRITTEN OFF RS.41,44,489.94/ - . II. DISALLOWANCE OF INTEREST RS.13,67,455/ - . III. AD HOC DISALLOWANCE ON : A. CARRIAGE INWARD CHARGES RS.1,00,000/ - . B. PACKING MATERIAL RS.1,25,000/ - . C. PRINTING & STATIONERY RS.50,000/ - D. T RAVELLING EXPENSES RS.50,000/ - . E. EXPENSES ON CAR & TELEPHONE, ETC. RS.91,500/ - TOTAL RS.4,16,500/ - AGGRIEVED BY THE ASSESSMENT ORDER DATED 22 - 12 - 2010, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITIONS MADE BY ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS WRITTEN OFF AND DISALLOWANCE OF INTEREST PAYMENT . IN RESPECT OF AD HOC DISALLOWANCE ON VARIOUS ITEMS THE COMMISSIONER OF INCOME TAX (APPEALS) RE STRICTED THE DISALLOWANCE TO RS.2,00,000/ - . NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITIONS. 3. SHRI V.L. JAIN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT HE WOULD NOT BE PRESSING GROUND NO. 1 RAISED IN THE APPEAL IN RESPECT OF 3 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 GRIEVANCE AGAINST NON - GRANTING OF PROPER OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER. 3.1 AS REGARDS OTHER GROUNDS OF APPEAL , THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. IN RESPECT OF DISALLOWANCE OF B AD D EBTS WRITTEN OFF , THE LD. AR SUBMITTED THAT THE ASSESSEE HAD ENGAGED THE SERVICES OF JASHNANI LEASING & FINANCE LTD. AND ITS SISTER CONCERN SATCO SECURITIES & FINANCIAL SERVICES LTD. D URING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006 - 07 FOR MAKING INVESTMENTS IN SHARES AND SECURITIES. INITIALLY, THE ASSESSEE PURCHASED SHARES FOR INVESTMENT PUR POSE AND OFFERED THE INCOME ARISING FROM SALE OF SHARES AND SECURITIES AS CAPITAL GAIN. S UBSEQUENTLY , IN THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL , THE ASSESSEE DECIDED TO VENTURE IN THE BUSINESS OF TRADING IN SHARES. THEREFORE, THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH JASHNANI LEASING & FINANCE LTD. FOR PURCHASE OF SHARES AND SECURITIES WAS IN THE NATURE OF BUSINESS TRANSACTION. THE ASSESSEE ADVANCED RS.64,68,034/ - OVER THE PERIOD OF TIME TO JASHNANI LEASING & FINANCE LTD. FOR PURCHAS E OF SHARES. THE SAID BROKER DID NOT CARRY THE INSTRUCTIONS OF THE ASSESSEE AND NO SHARE S WERE PURCHASED. THE DISPUTE AROSE BETWEEN THE ASSESSEE AND SHRI HARESH PARMANAND JASHNANI. THE ASSESSEE FILED A CRIMINAL COMPLAINT IN THE COURT OF CHIEF METROPOLITAN MAGISTRATE, ESPLANADE, MUMBAI AGAINST HIM AND HIS COMPANY , THAT WAS ENGAGED FOR TRANSA CTING (PURCHASE) OF SHARES. SUBSEQUENTLY, A COMPROMISE WAS ARRIVED BETWEEN THE PARTIES AND THE ASSESSEE DECIDED TO SETTLE THE DISPUTE AFTER RECEIVING RS.23,23,550/ - . SINCE, THE REMAINING AMOUNT OF RS.41,44,485/ - HAD BECOME IRRECOVERABLE , T HE SAME WAS WRI TTEN OFF AS BAD DEBT. THE LD. AR ASSERTED THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THAT THE TRANSACTION FOR PURCHASE OF SHARES WAS BUSINESS TRANSACTION. THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT THE AMOUNT WAS ADVANCED BY 4 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 THE ASSESSEE FOR PURCHASE OF SHARES FOR INVESTMENT PURPOSE. THE LD. AR ALSO REFERRED TO WRITTEN SUBMISSIONS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AT PAGES 56 TO 69 AND 80 TO 83 OF THE PAPER BOOK. 3.2 IN RESPECT OF GROUND NO. 3 RELATING TO DISALLOWANCE OF INTEREST RS.13,67,455/ - THE LD. AR SUBMITTED THAT THE ASSESSEE HAD ADVANCED LOANS TO TWO PARTIES I.E. NAGPAL LANDMARKS AND POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. AND HAD ALSO GIVEN INTEREST FREE ADVA NCES TO ITS THREE EMPLOYEES I.E. PRAKASH C. GIDWANI, NARESH C. GIDWANI AND MADHAV K. GIDWANI. THE LD. AR SUBMITTED THAT ADVANCES MADE TO NAGPAL LANDMARKS AND POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. WERE OUT OF COMMERCIAL EXPEDIENCY. THE AMOUNT ADVANCE D TO NAGPAL LANDMARKS WAS ON ACCOUNT OF INVESTMENT . AS FAR AS AMOUNT ADVANCED TO POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. IS CONCERNED THE ASSESSEE HAD SUFFICIENT OWN FUNDS TO COVER SUCH ADVANCES, THEREFORE, IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH CO URT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES & POWER LTD. REPORTED AS 313 ITR 340 , NO DISALLOWANCE IS CALLED FOR. AS REGARDS ADVANCES MADE TO PRAKASH C. GIDWANI, NARESH C. GIDWANI AND MADHAV K. GIDWANI ARE CONCERNED THEY ARE THE EM PLOYEES OF ASSESSEE . NO DISALLOWANCE IS TO BE MADE ON AMOUNTS ADVANCED TO EMPLOYEES. 3.3 IN RESPECT OF GROUND NO. 4 THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE OF RS. 4,16,500/ - WITHOUT THERE BEING ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS NOT INCURRED THE EXPENDITURE FOR BUSINESS PURPOSE. IN FIRST APPEAL , THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE DISALLOWANCE TO RS.2,00,000/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) AGAIN MADE DISALLOWANCE PURELY ON ESTIMA TIONS WITHOUT THERE BEING ANY EVIDENCE INDICATING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON CARRIAGE INWARD, PACKING MATERIAL, PRINTING AND 5 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 STATIONARY, TRAVELLING AND TELEPHONE, VEHICLE REPAIRS, INSURANCE AND DEPRECIATION ETC. IS NOT CONNECTED WITH THE BUSINESS OF ASSESSEE. 4. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) . THE LD. DR SUBMITTED THAT THE DOCUMENTS ON RECORD CLEARLY INDICATE THAT THE ASSESSEE HA D ADVANCED MONEY TO JASHNANI LEASING & FINANCE LTD. FOR PURCHASING SHARES FOR INVESTMENT PURPOSE. IN THE EARLIER ASSESSMENT YEARS THE GAIN ARISING FROM SALE OF SHARES HAS BEEN REFLECTED IN THE BOOKS OF ASSESSEE AS CAPITAL GAIN AND NOT BUSINESS INCOME. TH E ASSESSEE HAS NOT PLACED ANY DOCUMENT ON RECORD WHATSOEVER TO SUBSTANTIATE THAT ASSESSEE HAS ADVANCED MONEY TO JASHNANI LEASING & FINANCE LTD. FOR PURPOSE OF TRADING IN SHARES. SINCE, THE ASSESSEE SUFFERED LOSSES IN SHARE TRANSACTIONS , THE ASSESSEE HAS C HANGED HIS STANCE TO CLAIM THE BENEFIT OF SET OFF OF THE LOSS AS BAD DEBTS UNDER THE PROVISIONS OF SECTION 36(2)(I) OF THE ACT. THE CLAIM OF ASSESSEE CANNOT BE ADMITTED , WHEN THE SHARES ARE PURCHASED FOR INVESTMENT PURPOSE AND NOT AS BUSINESS TRANSACTION. 4.1 THE LD. DR FURTHER SUBMITTED THAT THE INTEREST EXPENDITURE WAS DISALLOWED BY THE AUTHORITIES BELOW AS THE ASSESSEE HAD DIVERTED BORROWED FUNDS TOWARDS INTEREST FREE LOANS. ON THE ONE HAND, THE ASSESSEE WAS PAYING HUGE INTEREST ON THE SAID BORROWIN GS AND ON THE OTHER THE ASSESSEE HAD ADVANCED INTEREST FREE LOANS TO CERTAIN PARTIES FOR NON - BUSINESS PURPOSE. THE LD. DR POINTED THAT THE ASSESSEE COULD NOT SUBSTANTIATE BUSINESS EXPEDIENCY IN EXTENDING THE LOANS. THE ASSESSEE FAILED TO FURNISH ANY DOCU MENTARY EVIDENCE TO SHOW THAT THE ADVANCES WERE MADE OUT OF ANY COMMERCIAL EXPEDIENCY. THE LD. DR PRAYED FOR DISMISSING THE APPEAL 6 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 OF ASSESSEE AND UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE GROUND NO. 1 IS AGAINST NON - GRANTING OF PROPER OPPORTUNITY OF HEARING AND VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE. TH E LD. AR OF ASSESSEE STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO.1. ACCORDINGLY, GROUND NO. 1 RAISED IN THE APPEAL BY ASSESSEE IS DISMISSED AS NOT PRESSED. 6. IN GROUND NO. 2 THE ASSESSEE HAS ASSAILED DISALLOWANCE OF RS.41,44,485/ - ON ACCOUNT O F B AD D EBTS WRITTEN OFF. THE CASE OF ASSESSEE IS THAT THE ASSESSEE HAD ADVANCED SUM TO THE TUNE OF RS. 64,68,034/ - OVER THE PERIOD OF TIME TO JASHNANI LEASING & FINANCE LTD. FOR PURCHAS E OF SHARES. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WANTE D TO TRADE IN SHARES. HOWEVER, THE AUTHORITIES BELOW AFTER ANALYZING THE DOCUMENTS ON RECORD AND FACTS OF THE CASE CAME TO THE CONCLUSION THAT IN THE EARLIER ASSESSMENT YEARS THE ASSESSEE HAD MADE INVESTMENTS IN SHARES AND HAD OFFERED THE GAIN ARISING ON SALE OF SHARES AS CAPITAL GAIN. THE FACT THAT IN THE EARLIER ASSESSMENT YEARS THE ASSESSEE HAD OFFERED THE PROFITS FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN HAS NOT BEEN DISPUTED BY THE ASSESSEE. AS PER THE CONTENTIONS OF THE LD. AR THE ASSESSEE WAS HAVING RUNNING ACCOUNT WITH JASHNANI LEASING & FINANCE LTD. AND THUS, THE ASSESSEE OVER THE PERIOD OF TIME HAD ADVANCED RS.64,68,034/ - TO JASHNANI LEASING & FINANCE LTD. FOR PURCHASE OF SHARES. IT IS A WELL SETTLED LAW THAT THE ASSESSEE CAN MAINTAIN TWO SEPARATE PORTFOLIOS , ONE RELATING TO INVESTMENTS AND OTHER RELATING TO TRADING IN SHARES. HOWEVER, THERE HAS TO BE CLEAR DISTINCTION INDICATING TWO SEPARATE PORTFOLIOS. IN THE INSTANT CASE, NO DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESS EE TO 7 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 SUBSTANTIATE THAT IN LATTER PART OF TRANSACTIONS THE ASSESSEE HAD ADVANCED SUM TO JASHNANI LEASING & FINANCE LTD. FOR PURCHASE OF SHARES FOR TRADING PURPOSE. THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENT EITHER BEFORE THE AUTHORITIES BELOW OR BEFO RE THE TRIBUNAL TO SHOW THAT SHARE TRANSACTIONS WERE CARRIED OUT THROUGH JASHNANI LEASING & FINANCE LTD. OR ANY OTHER BROKER DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL FOR TRADING IN SHARES. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A CATEGORIC FINDING THAT THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN ARISING FROM SALE OF SHARES IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006 - 07. IT IS ASSESSEES OWN CASE THAT HE WAS HAVING RUNNING ACCOUNT WITH JASHNANI LEASING & FINANCE LT D. IF THAT BE SO THE RUNNING ACCOUNT MUST BE IN RESPECT OF PURCHASE OF SHARES FOR INVESTMENT PURPOSE. THE RETURN (S) FILED IN THE PAST BY THE ASSESSEE DID NOT INDICATE THAT THE ASSESSEE AT ANY POINT OF TIME WAS ENGAGED IN SHARE TRADING BUSINESS. THE INEV ITABLE CONCLUSION THAT CAN BE DRAWN FROM THE FACTS OF THE CASE IS THAT THE LOSS ON ACCOUNT OF SHARE TRANSACTIONS IS A CAPITAL LOSS . THE LOSS ARISING FROM INVESTMENTS IN SHARES CANNOT BE CLAIMED AS BAD DEBT UNDER THE PROVISIONS OF SECTION 36(I)(VII) R.W. S. 36(2)(I) OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONED FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS GROUND . ACCORDINGLY, GROUND NO. 2 RAISED IN THE APPEAL BY ASSESSEE IS DISMISSED BEING DEVOID OF ANY MERIT. 7. IN GROUND NO. 3 OF APPEAL , THE ASSESSEE HAS ASSAILED DISALLOWANCE OF INTEREST RS.13,67,455/ - . IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD OBTAINED LO ANS FROM BANKS/FINANCIAL INSTITUTIONS AND HAD PAID INTEREST THEREON. AT THE SAME TIME THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO THE FOLLOWING PARTIES : 8 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 NAME OF THE PARTIES AMOUNT OF LOAN OUTSTANDING AS ON 31 - 03 - 2008 CORRESPONDING INTEREST DISALLOWANCE MADE BY AO NAGPAL LANDMARKS RS.29,76,480/ - RS.5,98,612/ - POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. RS.43,75,000/ - RS.4,96,414/ - PRAKASH C. GIDWANI RS.4,37,338/ - RS.70,113/ - NARESH C. GIDWANI RS. 4,18,030/ - RS.47,799/ - MADHAV K. GIDWANI RS.9,72,920/ - RS.1,54,517/ - TOTAL RS.13,67,455/ - AS REGARDS AMOUNT ADVANCED TO NAGPAL LANDMARKS , THE CONTENTION OF ASSESSEE IS THAT THE AMOUNT HAS BEEN ADVANCED FOR INVESTMENT PURPOSE, T HEREFORE, NO DISALLOWANCE ON THE GROUND OF DIVERSION OF FUNDS FOR NON - BUSINESS PURPOSE IS CALLED FOR. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS MADE ON BEHALF OF A SSESSEE. EXCEPT FOR BALD ASSERTIONS THE ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENTARY EVIDENCE, WHATSOEVER TO SHOW THAT ADVANCE TO NAGPAL LANDMARKS WAS IN THE FORM OF INVESTMENT AGAINST PROPERTY. IN SO FAR AS ADVANCE TO POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. IS CONCERNED , THE CONTENTIONS OF THE ASSESSEE IS THAT ADVANCE WAS GIVEN OUT OF OWN INTEREST FREE FUNDS ON ACCOUNT OF COMMERCIAL EXPEDIENCY. THE ADVANCE GIVEN TO POSITIVE LIFE STYLE DEVELOPERS PVT. LTD. IS TO THE TUNE OF RS.43,75,000/ - AS AGAINS T THE ASSESSEES BALANCE IN CAPITAL ACCOUNT RS.65,00,000/ - . THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES & POWER LTD. (SUPRA) HAS HELD THAT WHERE BOTH INTEREST FREE FUNDS AND INTEREST BEARING FUNDS ARE AVA ILABLE AND THE INTEREST FREE FUNDS ARE MORE THAN THE INVESTMENT MADE, THE PRESUMPTION IS THAT THE INVESTMENTS ARE MADE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THUS, IN VIEW OF UNDISPUTED FACT THAT OWN FUNDS OF ASSESSEE ARE SUFFICIENT TO CO VER THE LOAN ADVANCED, NO DISALLOWANCE U/S. 36(1)(III) IS CALLED FOR. 9 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 THE THIRD SEGMENT OF ADVANCE IS TO EMPLOYEES. THE LD. AR SUBMITTED THAT PRAKASH C. GIDWANI, NARESH C. GIDWANI AND MADHAV K. GIDWANI ARE THE EMPLOYEES OF ASSESSEE. THIS FACT HAS NOT B EEN DISPUTED BY THE AUTHORITIES BELOW. THE ONLY REASON FOR DISALLOWING INTEREST AGAINST SUCH DISALLOWANCE IS THAT THE ADVANCES ARE NOT IN THE NATURE OF ORDINARY ADVANCE OF SALARY. THE ADVANCES ARE SUBSTANTIAL WHICH WOULD TAKE YEARS FOR RECOVERY. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER CANNOT STEP INTO THE SHOES OF ASSESSEE TO DETERMINE THE QUANTUM OF ADVANCE TO BE GIVEN TO THE EMPLOYEES AND MODE AND TIME OF RECOVERY OF SAME. IT IS THE DISCRETION OF ASSESSEE TO DECIDE THE QUANTUM OF ADVA NCE, PERIOD OF ADVANCE AND THE MODE OF RECOVERY OF ADVANCE FROM AN EMPLOYEE. THE ONLY FACTOR THAT HAS TO BE ESTABLISHED IS THAT THE PERSONS TO WHOM ADVANCES ARE MADE ARE THE EMPLOYEES OF ASSESSEE. AS POINTED EARLIER THIS FACT HAS NOT BEEN DISPUTED. ACCO RDINGLY, WE ARE OF CONSIDERED VIEW THAT IN THE FACTS OF PRESENT CASE, NO DISALLOWANCE OF INTEREST IS TO BE MADE IN RESPECT OF ADVANCE MADE TO THREE EMPLOYEES OF ASSESSEE. ACCORDINGLY, GROUND NO. 3 RAISED IN THE APPEAL BY ASSESSEE IS PARTLY ALLOWED IN THE MANNER AFORESAID. 8. IN GROUND NO. 4 THE ASSESSEE HAS ASSAILED AD HOC DISALLOWANCE OF RS.2,00,000/ - IN RESPECT OF VARIOUS EXPENSES WHICH INTER ALIA INCLUDE CARRIAGE INWARD, PACKING MATERIAL, PRINTING & STATIONARY, TRAVELLING EXPENSES, VEHICLE REPAIRS, INSURANCE, DEPRECIATION AND TELEPHONE EXPENSES ETC. THE CONTENTIONS OF THE ASSESSEE IS THAT NO DISCREPANCIES WERE FOUND BY THE ASSESSING OFFICER IN THE BOOKS , YET THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.4,16,000/ - IN RESPECT OF OFFICE EXPENDITURE. THE COMMISSIONER OF INCOME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE BY RESTRICTING DISALLOWANCE TO RS. 2 ,00,000/ - TO TAKE CAR E OF OMISSIONS AND COMMISSIONS. 10 ITA NO . 342/PUN/2015, A.Y. 2008 - 09 AFTER PERUSAL OF THE ORDERS OF AUTHORITIES BELOW AND TAKING INTO CONSIDERATION TOTALITY OF FACT S , WE ARE OF CONSIDERED VIEW THAT DISALLOWANCE IN RESPECT OF VARIOUS OFFICE EXPENDITURE , IF RESTRICTED TO RS.1,00,000/ - WOULD BE SUFFICE TO COVER OMISSIONS AND COMMISSIONS. ACCORDINGLY, GROUND NO. 4 RAISED IN THE APPEAL BY ASSESSEE IS PARTLY ALLOWED. 9 . THE GROUND NO. 5 RAISED IN THE APPEAL IS GENERAL IN NATURE, HENCE, REQUIRES NO ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 08 TH DAY OF DECEMBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 08 TH DECEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 , PUNE 4. THE PR. CIT - 3, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE