M/s. Chemical Sales and Services, New Delhi V. ITO, New Delhi

ITA 3589/DEL/2014

• Counselvise Citation: 358920114 RSA 2014
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Opportunity of being heard; Commercial expediency; Revenue expenditure
• Section: 143(3); 142(1); 37(1)

Judgement Text

ITA NO .3589/D EL/ 2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO . 3 589 /DEL/20 1 4 A.Y. : 20 10 - 20 11 M/S CHEMCIAL SALES AND SERVICES, 3N, DCM BUILDING, 16, BARAKHAMBA ROAD, NEW DELHI 110 001 (PAN: AAEFCO142K) VS . ITO, WARD - 24(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGGARWAL, CA DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING: 0 6 . 0 7 .201 5 DATE OF ORDER : 08 . 0 7 .201 5 ORDER PER H.S. SIDHU : JM TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 2 9 . 4 . 20 1 4 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXIII, NEW DELHI ASSTT. YEAR 20 10 - 11 AND THE FOLLOWING GROUNDS HAVE BEEN RAISED: - 1. THAT THE LEARNED CIT{A} HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 10,54,790/ - OUT OF THE INTEREST EXPENSES OF RS. 21,81,286/ - ON THE GROUND THAT THE ASSESSEE HAS ALLEGEDLY DIVERTED INTEREST BEARING FUNDS FOR NON - BUSINE SS PURPOSES. THE SUBMISSION MADE AN EVIDENCE FURNISHED HAS ARBITRARILY BEEN BRUSHED ASIDE. ITA NO .3589/D EL/ 2014 2 2. THE LEARNED CLT{A} HAS FAILED TO APPRECIATE THAT THE ASSESSEE FIRM HAD ADVANCED FUND TO ONE OF ITS PARTNER NAMELY M/S SURESH GOEL & SONS HUF FOR CONSTRUCTION OF A BUILDING ON THE PLOT OWNED BY THE PARTNERS AND WAS TO BE USED BY THE ASSESSEE FIRM FOR ITS BUSINESS PURPOSES. THE FINDING OF THE LEARNED CLT{A} THAT IN REPLY TO A QUERY RAISED DURING THE COURSE OF APPEAL PROCEEDINGS, THE LEARNED AR REPLIED 'THAT THE ARC HITECTURAL DESIGN OF BUILDING WERE CLEARED AS A RESIDENTIAL BUILDING ONLY BUT THE APPELLANT PROPOSED TO USE 25% OF THE SAME FOR BUSINESS PURPOSES', IS FACTUALLY INCORRECT BECAUSE NO SUCH SUBMISSION HAD EVER BEEN MADE AND THE SUBMISSION MADE HAS BEEN TOTALL Y MISUNDERSTOOD BY LEARNED CIT{A}. 3. THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE INTEREST BEARING BORROWED FUNDS WERE DIVERTED FOR NON - BUSINESS PURPOSES, THE DISALLOWANCE AS UPHELD IS DESERVES TO BE DELETED AND THE INTEREST EXPENSES AS CLAIMED DESER VES TO BE ALLOWED AS REVENUE EXPENDITURE. 4. THAT IN ANY CASE THE LEARNED CIT{A} HAS ERRED IN NOT GRANTING A FAIR AND PROPER OPPORTUNITY OF BEING HEARD. IT IS THEREFORE PRAYED THAT THE DISALLOWANCE UPHELD BE DELETED AND THE ENTIRE INTEREST EXPENSES ITA NO .3589/D EL/ 2014 3 CLAIM ED BY THE ASSESSEE BE DIRECTED TO BE ALLOWED AS REVENUE EXPENDITURE U/S 237 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN WAS FILED BY THE ASSESSEE ON 21.9.2010 DECLARING INCOME OF RS.52,443/ - , WHICH WAS PROCESSED U/S 143(1). SUBSEQUENT LY, CASE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, ASSESSING OFFICER ISSUED STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE INCOME - TAX ACT, 1961, WHICH WERE SERVED. ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS AND DURING THE YEAR UNDER CO NSIDERATION ASSESSEE HAD SHOWN GROSS PROFIT OF RS.32,62,452/ - ON TOTAL TURNOVER OF RS.13,08,67,820/ - YIELDING A GP RATE OF 2.52%. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE HAD PAID INTEREST OF RS.21,81,286/ - ON SECURED LOAN OF RS.L,72,49,345/ - . THE BREAK - UP THE INTEREST PAID WAS RS.17,83,463/ - INTEREST ON LOAN, RS.49,635/ - AS PROCESSING FEES, RS.16,190/ - AS BANK CHARGES AND RS.3,31,998/ - AS BANK INTEREST. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT ONE OF THE PARTNER OF THE FIRM, MLS SURESH GOEL AND SONS, HUF HAD DEBIT BALANCE OF ITS CAPITAL AS ON 31.3.2010 OF RS.81,13,770/ - AS AGAINST THE BALANCE OF RS.L4,59,446 / - AS ON 01.04.2009 AND THE CAPITAL HAD NEVER BEEN IN THE CREDIT BALANCE. ON THE OTHER HAND, ASSESSEE'S SECURED LOAN WERE ALS O RISING WHICH STOOD AT RS.1,74,49,345/ - AS ON 3.1.3.2010 AS AGAINST THE FIGURE OFRS.1,25,47,750 / - AS ON 31.3.2009. CONSIDERING THESE FACTS IN VIEW IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE WAS PAYING INTEREST ON SECURED LOANS OTHER THAN FOR B USINESS PURPOSES. THEREFORE, ASSESSING OFFICER ASKED THE ITA NO .3589/D EL/ 2014 4 ASSESSEE TO EXPLAIN WHY INTEREST RELATED TO THE DEBIT BALANCE OF MLS SURESH GOEL AND SONS, HUF SHOULD NOT BE DISALLOWED U/S 36(1)(III) OF THE ACT ON PROPORTIONATE BASIS. IN RESPONSE TO THIS, ASSESSEE FILED HIS REPLY VIDE LETTER DATED 26.12.2012, (WHICH IS MADE PART OF THE ASSESSMENT ORDER BY THE ASSESSING OFFICER) AND CONTENDED THAT NO DISALLOWANCE SHOULD BE MADE. AUTHORISED REPRESENTATIVE OF THE ASSESSEE FURTHER FILED A LETTER DATED 29.01.2013 WHEREI N HE PLACED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS, WHICH ARE MENTIONED IN THE ASSESSMENT ORDER. ASSESSING OFFICER CONSIDERED THE REPLY OF THE ASSESSEE. HOWEVER, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT, IT IS FACT EVEN ACCEPTED BY THE ASSESSEE T HAT IT HAS GIVEN INTEREST - FREE LOAN OF RS.61,40,000 / - TO MLS SURESH GOEL AND SONS, HUF OUT OF ITS SECURED LOANS OF RS.1,17,07,384/ - . WHICH CLEARLY SHOWS THAT ASSESSEE WAS DIVERTING ITS INTEREST - BEARING FUNDS TO NON - INTEREST BEARING LOAN TO ONE OF ITS PARTN ERS FOX HIS UNDUE ENRICHMENT. TO DECIDE THE ISSUE INVOLVED IN THE CASE, ASSESSING OFFICER EXAMINED TH E SAME CONSIDERING THE FACT WHETHER DIVERSION OF INTEREST BEARING LOAN TO NON - INTEREST BEARING LOAN WAS FOR COMMERCIAL EXPEDIENCY? TO DECIDE THE SAME, ASSE SSING OFFICER PLACED RELIANCE IN THE CASE OF ATHERTON VS. BRITISH INSULATED & HELSBY CABLES LTD. (1925) 10 TC 155, HON'BLE APEX COURT'S DECISION IN THE CASE EASTERN INVESTMENTS LTD. VS. CIT (1951), 201 ITR 1, CIT VS. CHANDULAL KESHAVLAL & CO. (1960) 38 ITR 601 ETC. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL DECISIONS, MENTIONED ABOVE, IT WAS HELD BY THE ASSESSING OFFICER THAT THERE IS NO COMMERCIAL EXPEDIENCY IN DIVERTING INTEREST BEARING LOAN TO INTEREST FREE LOANS. THUS, HE HELD ITA NO .3589/D EL/ 2014 5 THAT LOANS GIVEN TO M / S SURESH GOEL AND SONS, HUF WERE NOT FOR BUSINESS PURPOSE. THUS, HE HELD THAT LOAN GIVEN TO ABOVE PARTNER IS NOT ALLOWABLE EITHER U/S 36(1)(III) OR 37(1) OF THE ACT. THEREFORE, ASSESSING OFFICER DISALLOWED A SUM OFRS.10,54,790 / - BEING 13% ON DEBIT BALANCE OF CAPITAL OF RS.81,13,770 / - , WHICH WAS ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THUS, TOTAL TAXABLE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.LL,07,23 0/ - VIDE ASSESSMENT ORDER DATED 11.2.2013 PAS SED U/S. 143(3) OF THE I.T. ACT. 3. AGAINST THE ASSESSMENT ORDER DATED 11 . 2 .200 3 , THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 2 9 . 4 .2014 HAS DISMISSED THE APPEAL OF THE ASSESSEE. 4. LD. COUNSEL OF THE ASSESSEE STATED THAT THE BOTH THE LOWER AUTHORITIES HAVE GONE WRONG IN DISALLOWING OF RS. 10,54,790/ - OUT OF THE INTEREST EXPENSES OF RS. 21,81,286/ - ON THE GROUND THAT THE ASSESSEE HAS ALLEGEDLY DIVERTED INTEREST BEARING FUNDS FOR NON - BUSINESS PURPOSES. HE SUBMITTED THAT THE SUBMISSION MADE AN EVIDENCE FURNISHED HAS ARBITRARILY BEEN BRUSHED ASIDE. HE FURTHER SUBMITTED THAT THE LD. CLT{A} HAS FAILED TO APPRECIATE THAT THE ASSESSEE FIRM HAD ADVANCED FUND TO ONE OF ITS PARTNER NAMELY M/S SURESH GOEL & SONS HUF FOR CONSTRUCTION OF A BUILDING ON THE PLOT OWNED BY THE PARTNERS AND WAS TO BE USED BY THE ASSESSEE FIRM FOR ITS BUSINESS PURPOSES. THE FINDING OF THE LEARNED CLT{A} THAT IN REPLY TO A QUERY RAISED DURING THE COURSE OF APPEAL PROCEEDINGS, THE LEARNED AR REPLIED 'THAT THE ARCHITECTURAL DESIGN OF BUILDING WERE CLEARED AS A RESIDENTIAL BUILDING ONLY BUT THE APPELLANT ITA NO .3589/D EL/ 2014 6 PROPOSED TO USE 25% OF THE SAME FOR BUSINESS PURPOSES', IS FACTUALLY INCORRECT BECAUSE NO SUCH SUBMISSION HAD EVER BEEN MADE AND THE SUBMISSION MADE HAS BEEN TOT ALLY MISUNDERSTOOD BY LEARNED CIT{A}. HE FURTHER STATED THAT IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE INTEREST BEARING BORROWED FUNDS WERE DIVERTED FOR NON - BUSINESS PURPOSES, THE DISALLOWANCE AS UPHELD IS DESERVES TO BE DELETED AND THE INTEREST EXPENSES AS CLAIMED DESERVES TO BE ALLOWED AS REVENUE EXPENDITURE. 5. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 6. I HAVE HEARD THE BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. I FIND THAT THE AO VIDE ORDER DATED 11.02.2013 IN DISREGARD TO THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE AND WITHOUT CONDUCTING ANY ENQUIRY OR INVESTIGATION GAVE A FINDING THAT THE ASSESSEE - ASSESSEE HAD DIVERTED ITS INTEREST BEARING FUNDS BY GIVING INTEREST FREE LOANS TO ONE OF ITS PARTNERS AND WORKED OUT A DISALLOWANCE UNDER SECTION 36(1)(III) AT RS. 10,54,790 / - (I.E. 13% OF 81,13,770/ - ). I ALSO FIND THAT THE ASSESSEE FILED ITS WRITTEN SUBMISSIONS BEFORE LEARNED CIT (A), WHEREIN, THE AFORESAID CON TENTIONS WERE REITERATED BEFORE LEARNED C IT(A) AS WELL, WHO IN COMPLETE DISREGARD OF THE SUBMISSIONS AND ALSO WITHOUT CONDUCTING OR DIRECTING ANY INVES T IGATION SUSTAINED THE DISALLOWANCE SO MADE BY LEARNED A O. I FURTHER FIND THAT THE SINCE THE FORMATION OF THE FIRM, THE A SSESSEE HAS BEEN CARRYING ON ITS BUSINESS ACTIVITIES OF TRADING IN CHEMICALS FROM THE AGRICULTURAL PROPERTY OWNED BY THE PARTNERS AND NO RENT ITA NO .3589/D EL/ 2014 7 HAS BEEN CHARGED BY THE PARTNERS IN RESPECT OF SUCH PREMISES. IT IS SUBMITTED THAT THE APPELLANT A LSO ENTERED INTO AN AGREEMENT WITH MLS SURESH GOEL & SON (H U F) ON 16.3.2009 FOR CONSTRUCTION OF BUILDING TO BE USED BY THE ASSESSEE FOR ITS BUSINESS ACTIVITIES AS PER CLAUSE NO. 5 OF THE SAID AGREEMENT. I FIND FORCE IN THE ASSESSEE S SUBMISSIONS THAT THE S AID BUILDING BEING LOCATED IN RESIDENTIAL AREA COULD NOT BE A VALID BASIS SO AS TO CONCLUDE THAT APPELLANT FIRM'S BUSINESS COULD NOT HAVE BEEN CARRIED OUT IN THE SAID PREMISES, AS THERE IS NO BAR TO CONDUCT BUSINESS FROM R E SIDENTIAL PREMISES ESPECIALLY IN THE CASE OF THE ASSESSEE A SSESSEE , WHICH IS IN TRADING OF CHEMICALS AND NO N MANUFACTURING. THUS, IN MY OPINION, THE FINDING OF LEARNED CIT ( A) THAT THE A SSESSEE COULD NOT HAVE CONDUCTED BUSINESS FROM RESIDENTIAL PREMISES DOES NOT STAND TO REASON IN AS MUCH AS, THERE IS NO PROHIBITION IN LAW TO CONDUCT SUCH BUSINESS NOR ANY MATERIAL HAS BEEN BROUGHT ON RECORD BY LEARNED CIT ( A) IN THIS REGARD. 6.1 I FURTHER NOTE THAT DURING THE ASSESSMENT PROCEEDINGS THE A SSESSEE HAD SPECIFICALLY STATED AS UNDER T HAT ASSESSE E FIRM HAS BEEN RUNNING ITS BUSINESS ACTIVITIES SO FAR FROM AGRICULTURAL PROPERTY SINCE THE INCEPTION OF THE FIRM. ASSESSEE NOW HAS TO RUN ITS BUSINESS FROM SOME COMMERCIAL PLACE. THAT IS WHY, FUNDS WERE GIVEN TO MLS SURESH GOEL & SONS HUF FOR CONSTRUCTION OF BUILDING ON PLOT SITUATED IN. GURGAON FOR BEING USED AS OFFICE OF THE ASSESSEE FIRM. TO PROVE AFORESAID SUBMISSION, YOUR GOODSELF MAY PAY VISIT ON THE SPOT TO SEE THE CONSTRUCTION OF THE BUILDING OR IN THE ALTERNATIVE, YOU MAY DEPUTE YOUR INSPECTOR FOR NECESSARY VERIFICATION ON THE BASIS OF SPOT ENQUIRY. IN VIEW THEREOF, IT WAS SUBMITTED BY THE LD. ITA NO .3589/D EL/ 2014 8 COUNSEL OF THE ASSESSEE THAT THE PURCHASE OF PLOT AND CONSTRUCTION OF BUILDING ON IT FOR BEING USED AS OFFICE OF THE ASSESSSEE FIRM IS BUSINESS ACTIVITY AND INTEREST PAID ON FUND BORROWED IS FOR THE PURPOSE OF BUSINESS AND IS ALLOWABLE AS DEDUCTION U/S 36(1)(III) OF THE ACT. THAT IS WHY INTEREST PAID ON SECURED LOANS MUST NOT BE DISALLOWED. 6.2 I FIND THAT THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE TH AT THE ONLY CONDITION FOR CLAIMING DEDUCTION UNDER SECTION 36(1 )(III) OF THE ACT IS 'COMMERCIAL EXPEDIENCY' OF THE EXPENDITURE INCURRED AND ONCE THE SAID CONDITION IS FULFILLED NO FURTHER FACTOR CAN BE BROUGHT IN TO DENY THE LEGITIMATE CLAIM OF DEDUCTION. IN THIS BEHALF, I DRAW SUPPORT FROM THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT REPORTED IN 288 ITR 1 WHEREIN IT HAS BEEN HELD AS UNDER: 'WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OPINION THAT IN EVERY CASE INTERE ST 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 ASSES SEE FOR THEIR PERSONAL BENEFIT, OBVIOUSLY IT CANNOT BE SAID THAT SUCH MONEY WAS ADVANCED AS A MEASURE OF COMMERCIAL EXPEDIENCY, HOWEVER, MONEY CAN BE SAID TO BE ADVANCED TO A SISTER CONCERN FOR COMMERCIAL EXPEDIENCY IN MANY EITHER CIRCUMSTANCES (WHICH NEED NOT BE ENUMERATED HERE). HOWEVER, ITA NO .3589/D EL/ 2014 9 WHERE IT IS OBVIOUS THAT A HOLDING COMPANY HAS A DEEP INTEREST IN ITS SUBSIDIARY, AND HENCE IF THE HOLDING COMPANY ADVANCES BORROWED MONEY TO A SUBSIDIARY AND THE SAME IS USED BY THE SUBSIDIARY FOR SOME BUSINESS PURPOSES, THE AS S ESSEE WOULD, IN OUR OPINION, ORDINARILY BE ENTITLED TO DEDUCTION OF INTEREST ON ITS BORROWED LOANS' [EMPHASIS SUPPLIED] 6.3 I FURTHER DRAW SUPPORT FROM THE JUDGMENT OF THE HON BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. CENTURY FLOUR MIL LS LTD REPORTED IN 334 ITR 377 WHEREIN THE HON BLE APEX COURT JUDGMENT IN THE CASE OF SA BUILDERS VS. CIT (SUPRA) HAS BEEN FOLLOWED. THE HON BLE HIGH COURT OF MADRAS WHILE FOLLOWING THE HON BLE APEX COURT JUDGMENT AS AFORESAID, HAS HELD THAT WHERE ASSESS EE HAVING BORROWED MONEY, UTILIZED IT AS ADVANCE TO ITS MANAGING DIRECTOR FOR PURCHASE OF LAND FOR BUSINESS PURPOSE, INTEREST PAID ON SAID BORROWING WAS TO BE ALLOWED AS DEDUCTION. THE FINDING OF THE HON BLE HIGH COURT WAS AS UNDER: - '10. THE SUPREME COURT IN THE CASE OF S. A. BUILDERS LTD. V. CIT (APPEALS) [2007] 288 ITR I, HAS CONSIDERED THE QUESTION OF PAYMENT OF INTEREST ON THE BORROWED MONEY. IN THAT CASE, THE BORROWED MONEY WAS LENT TO THE SISTER CONCERN WITHOUT CHARGING INTERES T AND IT WAS HELD THAT THE REVENUE MUST LOOK INTO THE TRANSACTION WHETHER THE TRANSFER OF FUNDS TO THE SISTER CONCERN WAS FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND ITA NO .3589/D EL/ 2014 10 WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. CONSIDERING THE PRINCIPLES IN THE ABOVE JUDGMENT, IT IS CLEAR THAT IN THE PRESENT CASE, THE AMOUNT WAS GIVEN TO THE MANAGING DIRECTOR AND OTHER PERSONS ONLY FOR THE PURCHASE OF THE LAND AND ALSO FOR BUSINESS PURPOSES AND THERE IS NO TRANSACTION OF LOAN INVOLVED IN THIS CASE. IN THESE CIRCUMSTANCES, I DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IT IS A QUESTION OF FACT. IT IS NOT A PERVERSE ORDER. THE ORDER PASSED BY THE TRIBUNAL IS BASED ON VALID MATERIALS AND EVIDENCE. ACCORDINGLY, T HE QUESTION RAISED IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS DEVOID OF MERIT AND THE SAME IS DISMISSED.' 6 . 4 I FURTHER DRAW SUPPORT FROM THE ITAT CHANDIGARH DECISION IN THE CASE OF DHANNA MAL CHATTER SAIN VS ITO REPOR TED IN 18 TTJ 552, WHEREIN, THE TRIBUNAL HAS HELD THAT IT IS THE ONUS OF REVENUE TO ESTABLISH THE INTEREST BEARING FUNDS HAVE BEEN UTILIZED FOR NON - BUSINESS PURPOSES AND WITHOUT DISCHARGING THE ONUS, NO ADDITION/ DISALLOWANCE CAN BE MADE UNDER SECTION 36 (1)(III) OF THE ACT AND IN THE CASE OF THE APPELLANT FIRM ALSO, THE SAID ONUS HAS NOT BEEN DISCHARGED BY THE LEARNED AO AND CIT (A) BOTH AND AS SUCH, NO DISALLOWANCE CAN BE MADE UNDER SECTION 36(1)(III) OF THE ACT'. 7. KEEPING IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE AS EXPLAINED ABOVE AND BY RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE HON BLE SUPREME COURT OF INDIA, HON BLE ITA NO .3589/D EL/ 2014 11 HIGH COURT OF MADRAS AND THE ITAT, CHANDIGARH, AS AFORESAID, I AM OF THE CONSIDERED VIEW THAT THE ADVANCES HAVE BEEN MADE TO M/S SURESH GOEL & SON (HUF) FOR THE PURPOSE OF THE BUSINESS AND ON ACCOUNT OF COMMERCIAL EXPEDIENCY, AND IT HAS NOT BEEN ESTABLISHED BY THE LEARNED ASSESSING OFFICER THAT ADVANCES ARE FOR NON - BUSINESS PURPOSES AND AS SUCH, DISALLOWANCE MA DE BY THE LEARNED ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THEREFORE, I DELETE THE ADDITION IN DISPUTE AMOUNTING TO RS. 10,54,790/ - MADE BY THE AO AND UPHELD BY THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOU NCED IN THE OPEN COURT ON 8 .07.2015. SD/ - [H.S. SIDHU] JUDICIAL MEMBER SR BHATNAGARR DATE: 8 . 07 .2015 C OPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES