M/s. Shil Technologies Pvt.Ltd., Vadodara V. Asstt. Commissioner of Income Tax, Vadodara

ITA 655/AHD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1446 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Gift; Proportionate interest
• Section: 234B; 37(1)

Judgement Text

PAGE 1 OF 10 , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, AHMEDABAD BEFORE , SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO .655 /AHD/2016 / ASSTT. YEAR : 2012 - 2013 & ./ ITA NO.26 7 6 /AHD/2017 / ASSTT. YEAR: 2014 - 2015 M/S SHIL TECHNOLOGIES PVT. LTD. , 613, YASHKAMAL BUILDING , SAYAJIGUNJ , VADODARA - 390005 . PAN: AACCS7981D VS . A.C.I.T , CIRCLE - 2(1 ) (1) , VADODARA. (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI BHAVIN MARFATIA , A.R REVENUE BY : SHRI LALIT P. JAIN, SR . DR / DATE OF HEARING : 10 / 06 / 201 9 / DATE OF PRONOUNCEMENT: 13 /06 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED TWO APPEAL S HAVE BEEN FILED AT THE INSTANCE OF THE AS SESSEE AGAINST THE TWO SEPARATE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 2 , VADODARA [ LD. CIT (A) IN SHORT] , DATED 29 / 1 2 / 2015 AND 25/09 /2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143 (3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 28 / 01 / 201 5 AND 22/11 /2016 RELEVANT TO ASSESSMENT YEAR S (AY S ) 2012 - 13 & 2014 - 15 RESPECTIVELY . ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 2 OF 10 FIRST , WE TAKE UP ITA NO.655 /AHD.2016 FOR A.Y. 2012 - 13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ALL THE GROUNDS OF APPEAL IN THIS APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, VADODARA ['THE CIT(A)'] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2(1)(1), VADODARA ['THE AO'] IN DISALLOWING INTEREST EXPENDITURE AMOUNTING TO RS. 27,68,664 HOLDING THA T INTEREST BEARING FUNDS WERE UTILIZED FOR MAKING INTEREST FREE ADVANCES, DESPITE THE FACT THAT THE APPELLANT HAD SUFFICIENT INTEREST FREE FUNDS IN THE FORM OF OWN FUNDS AND FREE RESERVES AVAILABLE WITH IT. 2. THE LEARNED CIT(A) ERRED IN FACT AND I N LAW IN CO NFIRMING THE ACTION OF THE AO IN DISALLOWING GIFT EXPENDITURE AMOUNTING TO RS. 3,05,125/ - ON ADHOC BASIS. 3. YOUR APPELLANT CRAVES THE RIGHT TO ADD TO OR ALTER, AMEND, SUBSTITUTE, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUND OF APPEAL. THE 1 ST ISSUE RAIS ED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY DISALLOWING INTEREST EXPENSES OF RS. 27,68,664/ - ON ACCOUNT OF DIVERSION OF FUNDS. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENG AGED IN THE BUSINESS OF TRADING IN ENGINEERING CUTTING TOOLS, HOLDERS, SPARES CUTTERS, ELECT R ODES, ADHESIVES , ETC . THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS SHOWN LOANS AND ADVANCES TO ITS DIRECTOR IN ITS BALANCE SHEET AS ON 31 - 3 - 2019 AS DETAILED BELOW: (A). MR. ATUL SHAH RS.44,20,740/ - (B). MRS. SHILPA ATUL SHAH RS.1,57,15,000/ - ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 3 OF 10 2.1 THE ASSESSEE DID NOT CHARGE ANY INTEREST ON THE LOANS GIVEN TO THE DIRECTORS ON THE REASONING THAT IT HAS OWN SUFFICIENT FUNDS OF RS. 5 , 38 , 67 , 855/ - AS SHOWN IN ITS BALANCE SHEET AS ON 31/03/2011. AS SUCH , THE ASSESSEE CLAIMED THAT THE LOANS AND ADVANCES WERE GIVEN TO THE DIRECTORS OUT OF ITS FUNDS . T HEREFORE THERE WAS NO REASON TO CHARGE ANY INTEREST FROM THE DIRECTORS. 2.2 HOWEVER, THE AO DISAGREED WITH THE CON TENTIONS OF THE ASSESSEE BY OBSERVING THAT IT HAS INCURRED INTEREST COST OF RS. 85 , 12 , 348 / - ON THE MONEY BORROWED FROM THE BANKS. THEREFORE THE AO WAS OF THE VIEW THAT THE INTEREST EXPENSES INCURRED BY THE ASSESSEE COULD HAVE BEEN AVOIDED TO THE EXTENT OF THE AMOUNT OF LOAN S AND ADVANCES GIVEN TO THE DIRECTORS WITHOUT CHARGING THE INTEREST. 2.3 THE AO ALSO NOTICED THAT THE ASSESSEE FAILED TO JUSTIFY WHETHER THE AMOUNT OF LOANS AND ADVANCES WAS GIVEN TO THE DIRECTORS IN THE COURSE OF THE BUSINESS. IN VIEW OF THE ABOVE , THE A O WORKED OUT THE AMOU N T OF INTEREST AT RS. 27,68,664/ - ATTRIBUTABLE TO SUCH LOANS AND ADVANCES AND DISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF THE ASSESSEE . 3. THE A GGR IE VED ASSESSEE PREFERRED AN APPEAL TO THE LD.CIT(A) WHO HAS CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: THERE WAS DIRECT NEXUS BETWEEN THE INTEREST FREE ADVANCES GIVEN TO SHRI ATUI SHAH AND SMT.SHILPHA ATUI SHAH AND INTEREST BEARING CAPITAL BORROWED. IN VIEW OF THESE FACTS, I AM OF THE CONSIDERED VIEW THAT INTEREST BEARING CAPITAL BORROWED WAS NOT UTILIZED FOR THE PURPOSES OF BUSINESS TO THE EXTENT OF ADVANCES GIVEN TO SHRI ATUI SHAH AND SMT. SHILPA ATUI SHAH, AND ACCORDINGLY, PROPORTIONATE INTEREST EXPENDITURE DESERVES TO BE DISALLOWED ON ACCOUNT OF NON - BUSINESS USE. IN VIEW OF THE DIRECT NEXUS BETWEEN THE BORROWED CAPITAL AND INTEREST FREE ADVANCES, THE CASE LAWS RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS. ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 4 OF 10 4.1.1 IT IS AN ESTABLISHED LEGAL POSITION THAT WHEN THE BORROWED CAPITAL WAS UTILIZED FOR INTEREST FREE ADVANCES GIVEN TO THE DIRECTORS AND RELATIVES, THE INTEREST EXPENDITURE ON SUCH BORROWED CAPITAL CANNOT BE ALLOWED U/S 36(L)(III) OF THE ACT. THE FOLLOWING JURISDICTIONAL PRONOUNCEMENTS ARE WORTH MENTIONING AS UNDER BEING AGGR IEVED BY THE ORDER OF THE LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 4. T HE LD.AR, BEFORE US , SUBMITTED THAT THE OWN FUNDS OF THE ASSESSEE EX C EED THE AMOUNT OF LOANS AND ADVANCES GIVEN TO THE DIRECTORS. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE OF I NTEREST EXPENSES. 5. ON THE OTHER HAND , LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL S AVAILABLE ON RECORDS. THE ISSUE IN THE INSTANT CASE RELATES TO THE DISALLOWANCES OF INTEREST EXPENSES ATTRIBUTABLE TO THE LOANS AND ADVANCE S GIVEN TO THE DIRECTORS WITHOUT CHARGING ANY INTEREST FROM THEM. THEREFORE, THE AUTHORITIES BELOW W ERE OF THE VIEW THAT THE ASSESSEE HAS DIVERTED INTEREST - BEARING FUND TO THE DIRECTORS. 6.1 FROM THE PRECE DING DISCUSSION , WE NOTE THAT THE PLEA O F THE ASSESSEE THAT ITS FUNDS EXCEED THE AMOUNT OF LOANS AND ADVANCES TO THE DIRECTORS HAS NOT BEEN DOUBTED. 6.2 T HE LD.DR, AT THE TIME OF THE HEARING HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENT OF THE LD.AR FOR THE ASSESSEE. THEREFORE, WE CAN SAFELY PRESUME THAT THE OWN FUND OF THE ASSESSEE EXCEEDS THE AMOUNT OF LOANS AND ADVANCES GIVEN TO THE DIRECTORS. T HUS, IT CAN BE INFERRED THAT THE ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 5 OF 10 ASSESSEE HAS UTILIZED ITS FUNDS FOR ADVANCING SUCH LOANS TO THE DIRECTORS . T HUS IN SUCH FACTS AND CIRCUMSTANCES , NO DISALLOWANCE OF INTEREST IS WARRANTED UNDER THE PROVISION OF SECT I ON 36 (1)(III)OF THE ACT. IN THIS REGARD , WE FIND SUPPORT AND GUIDANCE FROM THE JUDG MEN T OF HON BLE GUJARAT HIGH COURT IN THE C A SE OF CIT VS . GUJARAT FOILS LTD. REPORTED IN 377 ITR 324(GUJARAT) WHEREIN IT WAS HELD AS UNDER: - WHERE THE ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH IT TO LEND INTEREST FREE ADVANCES, THE TRIBUNAL WAS JUSTIFIED IN DELETING DISALLOWANCE OF INTEREST UNDER SECTION 36(1)( III ). IN VIEW OF THE ABOVE PR O POSITION LAID DOWN BY THE HON BLE GUJARAT HIGH COURT , WE ARE OF THE VIEW THAT THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENSES ON ACCOUNT OF LOANS AND ADVANCES GIVEN TO THE DIRECTORS AS LONG AS THE AMO U NT OF LOAN S AND ADVANCES DOES NOT EXCEED THE OWN FUNDS OF THE ASSESSEE . A CCORDINGLY , WE REVERSE THE OR DER OF THE LD.CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE LD.CIT(A) ERRED IN PART LY CONFIRMING THE ORDER OF THE AO BY DISALLOWING GIFT EXPENSES TO THE TUNE OF RS. 3 , 05 , 125/ - ON AD - HOC BASIS. 7.0 T HE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED EXP EN SES OF RS.10 , 98 , 351 / - ONLY ON ACCOUNT OF THE GIFT OF GOLD COINS AND SILVER BARS. THE ASSESSEE CLAIMED THAT SUCH EXPENDITURE S WE RE INCURRED ON ACCOUNT OF GIFT AND ARTICLE ON THE OCCASION OF DIWALI FESTIVAL. ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 6 OF 10 7 . 1 HOWEVER, THE AO DISAGREED WITH THE CONTENTIONS OF THE ASSESSEE BY OBSERVING AS UNDER: 1. THE ASSESSEE FAILED TO FURNISH THE LIST OF PERSONS/PARTIES TO WHOM SUCH GIFTS WERE PROVIDED. 2. THE EXPENDITURE O N THE PURCHASES OF GIFTS AND ARTICLES WERE MADE THROUGHOUT THE YEAR. AS S UCH , THE PURCHASES WERE NOT MADE DURING THE DIWALI PERIOD. IN VIEW OF THE ABOVE , THE AO HELD THAT THE ASSESSEE HA D NOT INCURRED THE EXPENSES ON THE GIFT O F GOLD COINS AND SILVER BARS IN THE COURSE OF THE BUSINESS. ACCORDINGLY , THE AO DISALLOWED THE SUM OF RS. 6 , 10 , 251/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7 . 2 THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO HAS PARTLY CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 4.2 THIRD GROUND PERTAINS TO DISALLOWANCE OF RS. 6,10,251/ - OUT OF EXPENSES OF RS. 10,98,351/ - ON ACCOUNT OF GIFT & ARTICLES. THE AO HAS WORKED OUT THE DISALLOWANC E ON ACCOUNT OF PURCHASE OF GOLD COINS AND SILVER BARS. THE EXPENDITURE ON OTHER ARTICLES HAS BEEN ALLOWED BY THE A.O. ON PERUSAL OF THE DETAILS OF THE EXPENSES, IT IS NOTICED THAT GOLD COINS AND SILVER BARS WERE PURCHASED IN THE MONTH OF OCTOBER ON THE OC CASION OF DIWALI. ALTHOUGH IT IS CUSTOMARY TO DISTRIBUTE THE GIFTS TO THE ESTEEMED CLIENTS, BUT THE APPELLANT HAS NOT MAINTAINED ANY RECORD FOR DISTRIBUTION OF GOLD COINS AND SILVER BARS. KEEPING IN VIEW THE CUSTOM OF DISTRIBUTION OF GIFTS ON THE OCCASIO N OF DIWALI AND VOLUME OF THE BUSINESS OF THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT MIGHT HAVE INCURRED SOME EXPENSES IN THIS REGARD. HOWEVER, THE POSSIBILITY OF PERSONAL USE OF GOLD COINS AND SILVER BARS BY THE FAMILY MEMBERS OF THE DIRECTORS AND THEIR RELATIVES CANNOT BE ALSO RULED OUT. THEREFORE, TO MEET THE END OF JUSTICE, 50% OF THE DISALLOWANCE AMOUNTING TO RS.3,05,125/ - IS ALLOWED AND DISALLOWANCE TO THE I EXTENT OF RS. 3,05,125/ - IS CONFIRM ED. THUS APPELLANT GETS PARTIAL RELIEF IN RESPECT OF THIS GROUND . ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 7 OF 10 BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD.AR, BEFORE US , SUBMITTED THAT THERE C OULD NOT BE ANY DISALLOWANCE OF THE EXPENSES ON AN AD - HOC BASIS . H OWEVER, LD. AR FOR THE ASSESSEE AGREED TO MAKE THE DISALLOWANCE TO THE TUNE OF 10% OF THE EXPENSES INCURRED ON THE PURCHASE OF GOLD COINS AND SILVER BARS. 9. ON THE OTHER HAND , THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORIT I ES BELO W. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS . I N THE INSTANT CASE , THE DISALLOWANCE WAS MADE BY THE AO IN PART FOR THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF GIFT ARTICLES . T HE AO MADE THE DISALLOWAN CE FOR TWO REASONS ; F IRSTLY, THE ASSESSEE FAILED TO FURNISH THE DETAILS OF THE PERSONS/PARTI ES TO WHOM THE GIFTS WERE GIVEN AND SECONDLY, THE PURCHASES WERE NOT MADE DURING THE PERIOD OF DIWALI FESTIVAL. ACCORDINGLY , THE PLEA OF THE ASSESSEE THAT SUCH EXPE NDITURE S WERE INCURRED ON THE OCCASION OF DIWALI FESTIVAL WAS REJECTED. SUBSEQUENTLY, THE LD.CIT(A) PAR T LY CONFIRMED THE ORDER OF THE AO AS DISCUSSED ABOVE. 10. 1 INDEED , THE ONUS L I E S ON THE ASSESSEE TO JUSTIFY ITS CLAIM BASED ON DOCUMENTARY EVIDENCE THAT THE EXPEN SES W ERE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS UNDER THE PROVISION OF SECTION 37(1) OF THE ACT. HOWEVER, WE NOTE THAT THE ASSESSEE FAILED TO PROVIDE THE LIST OF P ERSONS/PARTIES TO WHOM THE GIFTS WERE PROVIDED. IN OUR CONSIDERED VIEW , THE L IST OF PERSONS OF THE PARTIES WAS NECESSARY TO PROVE THAT EXPENDITURE S W ERE INCURRED IN THE COURSE OF BUSINESS . T HEREFORE IN SUCH CIRCUMSTANCES , WE ARE OF THE VIEW THAT ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 8 OF 10 TH E DISALLOWANCE IS WARRANTED. BUT WE FURTHER NOTE THAT THE AUTHORITIES BELOW HAVE ALSO ERRED IN ACCEPTING PART OF THE EXPENSES AS INCURRED FOR THE BUSINESS AND REJECTING PART OF EXP ENSES AS NOT INCURRED IN THE COURSE OF BUSINESS WITHOUT AD DUCING ANY REASON THEREON. TO OUR MIND , THE AUTHORIT I ES BELOW IN THE GIVEN FACTS AND CIRCUMSTANCES CANNOT ADOPT SUCH A HYBRID APPROACH. 10. 2 WE FURTHER NOTE THAT THE DISALLOWANCE CANNOT BE MADE BY THE AUTHORIT I ES BELOW MERELY ON THE GROUND THAT THE PURCHASES FOR THE GOLD COINS AND SILVER BARS WERE MADE THRO UGHOUT THE YEAR . T HERE IS NO RES TRICTION UNDER ANY LAW TO PROVIDE THE GIFT TO THE CUSTOMER ON ANY PARTICULAR OCCASION. THEREFORE, WE DISAGREE WITH THE BASIS OF DISALLOWANCE ADOPTED BY THE AUTHORITIES BELOW. 10.3 AFTER CONSIDERING THE FACTS IN TOTALITY AS DISCUSSED ABOVE, WE ARE LEFT WITH NO ALTERNATIVE EXCEPT TO MAKE THE DISALLOWANCE ON AN AD - HOC BASIS IN THE GIVEN FACTS AND CIRCUMSTANCES. T HEREFORE WE RESTRICT THE DISALLOWANCE OF THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF THE GIFT OF GOLD COIN S AND SILVER BARS TO THE TUNE OF 15% OF SUCH EXPENDITURE. HE NCE, THE GROUND OF APPEAL OF THE ASSESSEE IS PAR TL Y ALLOWED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR T LY ALLOWED. NOW COMING TO THE ITA NO.2676/AHD/2017 FOR A.Y. 2014 - 15. THE AS SESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS. ALL THE GROUNDS OF APPEAL IN THIS APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 9 OF 10 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, VADODARA ['THE C1T(A)'] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE LEARNED INCOME TAX OFFICER, WARD - 2(1 )(3), VADODARA ('THE AO') IN DISALLOWING THE INTEREST EXPENDITURE OF RS. 30,29,328/ - U/S. 36(L)(III) OF THE INCOME TAX ACT, 1961 ('THE ACT') 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CONCLUDING THAT INTEREST FREE ADVANCES WERE MADE FROM INTEREST BEARING FUNDS DESPITE THE FACT THAT THE APPELLANT HAD ADEQUATE INTEREST FREE FUNDS. 3. THE LEARNED AO ERRED IN FACT AND IN LAW IN LEVYING INTEREST U/S. 234B OF THE ACT. 4. THE LEARNED AO ERRED IN FACT AND IN LAW IN LEVYING INTEREST U/S. 234C OF THE ACT. 5. THE LEARNED AO ERRED IN FACT AND IN LAW IN INITIATING PENALTY .PROCEEDINGS U/S. 271(L)(C)OFTHE ACT. 6. YOUR APPELLANT CRAVES THE RIGHT TO ADD TO OR ALTER, AMEND, SUBSTITUTE, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 36(1)(III) OF THE ACT FOR RS. 30 , 29 , 328/ - ON ACCOUNT OF DIVERSION OF FUNDS. 11 . AT THE OUTSET, WE NOTE THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES WE HAVE DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE IN THE OWN CASE OF THE ASSESSEE IN ITA NO.655/AHD/2016 PERTAINING TO A.Y. 2012 - 13 VIDE PARAGRAPH NO. 6 OF THIS ORDER. FOR DETAILED DISCUSSION , PLEASE REFER THE RELEVANT PARA. RESPECTFULLY FOLLOWING THE SAME, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO S.655 /AHD/2016 & 2676 /AHD/2017 ASSTT. YEAR S 2012 - 13 & 2014 - 15 PAGE 10 OF 10 12 . IN THE COMBINED RESULTS, THE APPEALS OF THE ASSESSEE BEARING ITA NO.655/AHD/2016 FOR A.Y 2012 - 13 IS PAR T LY ALLOWED AND ITA NO.2676/AHD/2017 FOR A.Y 2014 - 15 IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 13 /06 / 2019 AT AHMEDABAD. - SD - - SD - (MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 13 / 06 /2019 M ANISH