SUHAMI POWER & FINANCE CORPORATION, MUMBAI v. ITO 12(2)(1), MUMBAI

ITA 2550/MUM/2009 | 2005-2006
Pronouncement Date: 17-02-2010 | Result: Dismissed

Appeal Details

RSA Number 255019914 RSA 2009
Assessee PAN AASFS8718F
Bench Mumbai
Appeal Number ITA 2550/MUM/2009
Duration Of Justice 9 month(s) 27 day(s)
Appellant SUHAMI POWER & FINANCE CORPORATION, MUMBAI
Respondent ITO 12(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 17-02-2010
Assessment Year 2005-2006
Appeal Filed On 20-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH MUMBAI BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2550/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. SUHAMI POWER & FINANCE INCOME TAX OFFICER - 12 (2)(1) CORPORATION 26 GOBIND MAHAL MUMBAI 86 B N.S. ROAD MARINE DRIVE VS. MUMBAI 4000020 PAN - AASFS 8718 F APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA RESPONDENT BY: SHRI ARUN C. BHARAT O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE BY THE ASSESSEE IS AGAINST THE O RDER OF THE CIT(A)- XII MUMBAI DATED 04.02.2009. 2. ASSESSEE HAS RAISED 5 GROUNDS OUT OF WHICH GROUND N O. 2 PERTAINING TO DISALLOWANCE UNDER SECTION 14A WAS NOT PRESSED. 3. GROUND NO. 1 PERTAINS TO DISALLOWANCE OF INTEREST OF RS.9 44 514/-. THE FACTS LEADING TO THE DISALLOWANCE ARE THAT THE A.O. HAD OBSERVED THAT THE ASSESSEE HAD ADVANCED LOANS OF RS.8 19 07 311/- ON WHICH IT WAS RECEIVING INTEREST AT 10%. THE ASSESSEE ALSO RECEIVED LOANS OF RS.23.68 CRORES FOR WHICH IT WAS PAYING INTEREST AT 18%. SINCE THE ASSE SSEE DOES NOT HAVE ANY CAPITAL (BEING SMALL AMOUNT OF RS.62 500/-) OF ITS OWN SUBSTANTIALLY THE ENTIRE AMOUNT WAS BORROWED. THE A.O. CONSIDERED THA T BORROWALS FROM 2 PARTIES I.E. SHRI SHAILENDRA SINGH OF RS.1.21 CROR ES AND MR. HARINDRA SINGH OF RS 1.21 CRORES ON WHICH INTEREST AT RS.10 62 579 /- EACH WAS PAID.HE WAS OF THE VIEW THAT ENTIRE INTEREST CAN NOT TO BE ALLO WED AT 18% AS THE ASSESSEE HAS CHARGED ONLY 10% ON THE ADVANCES SO MADE. ACCOR DINGLY HE DISALLOWED INTEREST OF 8%. THE CIT(A) CONSIDERED THE SUBMISSIO NS OF THE ASSESSEE AND ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 2 INVOKING THE CONDITIONS OF ALLOWANCE OF INTEREST UN DER SECTION 36(1)(III) CONFIRMED THE DISALLOWANCE STATING AS UNDER: - 2.3 I HAVE CONSIDERED THE SUBMISSIONS MADE FOR THE APPELLANT AND THE ASSESSMENT ORDER. I AM IN AGREEMENT WITH THE APPELL ANT THAT THE ASSESSING OFFICER CANNOT SIT IN THE CHAIR OF BUSINE SSMAN TO DECIDE THE BUSINESS EXPEDIENCY BEHIND AN ACTION. AT THE SAME T IME THE OBSERVATION OF THE ASSESSING OFFICER THAT BORROWED FUNDS HAD BE EN UTILIZED IN ADVANCING LOANS AT LESSER INTEREST CANNOT BE IGNORE D. THE MATTER HAS TO BE DECIDED AS TO THE COMMERCIAL EXPEDIENCY LYING BE HIND SUCH ACTION ON THE PART OF THE APPELLANT. THE APPELLANT HAD NOT FI LED ANY EXPLANATION AS TO WHAT NECESSITATED IT WHILE CARRYING OUT ITS BUSI NESS TO ADVANCE LOAN AT A LOWER RATE OF INTEREST THAN WHAT IT HAD PAID. MER ELY RELYING ON GENERAL INTERPRETATIONS AND CITING CASE LAWS WILL NOT HELP ITS CASE IN THE ABSENCE OF FACTUAL EXPLANATION. IN VIEW OF THE ABOVE THE A CTION OF THE ASSESSING OFFICER IN DISALLOWING THE INTEREST EXPENDITURE OF RS.9 44 514/- IS CONFIRMED. 4. THE LEARNED COUNSEL REFERRED TO THE BALANCE SHEET E XTRACTED IN THE ASSESSMENT ORDER ON PAGE NO. 2 AND SUBMITTED THAT T HE ASSESSEE IS IN THE BUSINESS OF SHARE INVESTMENT TRADING IN GOODS BOR ROWING AND LENDING MONEY AND ALSO COMMISSION AGENT AND AS PART OF THE BUSINESS IT HAS BORROWED FUNDS FOR THE PURPOSE OF BUSINESS. IT WAS HIS SUBMISSION THAT PROVISIONS OF SECTION 40A(2)(B) DOES NOT ARISE AS T HE PARTIES FROM WHOM MONIES WERE BORROWED ARE NOT RELATED AND ARE EXEMPT BY THE PROVISIONS HENCE DISALLOWANCE UNDER SECTION 40A(2)(B) DOES NOT ARISE. IT WAS ASSESSEES BUSINESS DECISION TO ADVANCE MONIES AT 10% WHEREAS IT HAD TO BORROW AT 18% AS PER THE MARKET RATE AND REFERRING TO THE ORD ER OF THE A.O. SUBMITTED THAT ONCE THE MONIES WERE BORROWED FOR THE PURPOSE OF BUSINESS THE A.O. CANNOT DISALLOW A PART OF THE INTEREST CLAIMED WHEN HE HAS NOT DISALLOWED THE ENTIRE INTEREST AMOUNT. A PART DISALLOWANCE DOE S NOT ARISE ONCE IT IS AGREED THAT THE FUNDS ARE BORROWED FOR THE PURPOSE OF BUSINESS. RELYING ON VARIOUS DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IT WAS SUBMITTED THAT ONCE FUNDS ARE BORROWED FOR THE PURPOSE OF BUSINESS AND AS ASSESSEE WAS HAVING MULTIPLE BUSINESS AND FUNDS ARE MIXED UP TH E A.O. CANNOT DISALLOW THE INTEREST SINCE IT IS A COMMERCIAL DECISION. WHE N IT WAS POINTED OUT BY THE BENCH ABOUT THE FINDINGS OF THE CIT(A) THAT NO EXPLANATION WAS GIVEN WHY THE MOUNTS WERE ADVANCED AT A LESSER PERCENTAGE IT WAS SUBMITTED THAT THERE ARE SEVERAL TRANSACTIONS UNDERTAKEN BY THE AS SESSEE AND THE NEXUS OF ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 3 FUNDS CANNOT BE PRODUCED HENCE THE ISSUE CAN BE CO NSIDERED ONLY ON LEGAL PRESUMPTIONS. IT WAS HIS SUBMISSION THAT UNDER SECT ION 36(1)(III) ALSO ONCE IT IS CONSIDERED THAT THE AMOUNTS ARE BORROWED FOR THE PURPOSE OF BUSINESS THE DEDUCTION HAS TO BE ALLOWED. HE ALSO REFERRED TO TH E DISALLOWANCE MADE BY THE A.O. IN PARA 5 OF THE ORDER WITH REFERENCE TO T HE DEBIT BALANCE OF THE PARTNERS AND INVESTMENTS IN SHARES AND PLOTS AND TH E DISALLOWANCE TO THE EXTENT OF RS.14 15 600/- WHICH WAS NOT CONTESTED BY THE ASSESSEE AND SUBMITTED THE ONCE THE A.O. EXAMINED THE SAME BORRO WALS FOR THE PURPOSE OF INVESTMENT AT LEASET HE COULD HAVE TELESCOPED T HE DISALLOWANCE INTO THE OTHER DISALLOWANCES AND CANNOT MAKE SEPARATE DISALL OWANCES ON THE SAME SET OF FACTS. 5. THE LEARNED D.R. IN REPLY SUBMITTED THAT PROVISIONS OF SECTION 40A(2) ARE NOT RELEVANT AS THE DISALLOWANCE IS CONSIDERED UNDER THE PROVISIONS OF SECTION 36(1)(III). HE REFERRED TO THE FINDINGS OF THE CIT(A) THAT THE ASSESSEE HAS NOT EXPLAINED WHY FUNDS ARE BORROWED AT 18% AND ADVANCED AT 10%. HE RELIED ON THE DECISION OF THE HON'BLE P&H HIGH COUR T IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD. 286 ITR 1 FOR THE SUBMISSI ON THAT THE ASSESSEE HAS TO EXPLAIN THE NEXUS BETWEEN THE FUNDS ADVANCED AND THE FUNDS BORROWED TO PROVE THE BUSINESS NECESSITY. THERE IS NO EXPLANATI ON OFFERED THE A.O. IS RIGHT IN DISALLOWING THE INTEREST CLAIM AT 18% ON T HE BORROWED AMOUNT BY THE ASSESSEE. 6. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE ASS ESSEES CLAIM IS TO BE ALLOWED ON THE PRINCIPLES ESTABLISHED BY THE HON 'BLE SUPREME COURT IN THE CASE OF DCIT VS. CORE HEALTH CARE LTD. 298 ITR 194 WITH REFERENCE TO SECTION 36(1)(III) SINCE THESE ARE BORROWED FOR THE PURPOSE OF BUSINESS. 7. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE BALA NCE SHEET EXTRACTED IN PAGE 2 OF THE ASSESSMENT ORDER THE ASS ESSEES OWN CAPITAL WAS ONLY RS.62 500/- WHEREAS IT HAS BORROWED FUNDS TO T HE EXTENT OF RS.23.69 CRORES. THE INTEREST CLAIM ON THE ABOVE AMOUNT WAS TO THE TUNE OF RS.2 39 65 691/-. OUT OF THE AMOUNT THE A.O. DISALL OWED AN AMOUNT OF RS.51 500/- TOWARDS FUNDS TAKEN BY THE PARTNERS. IN ADDITION TO THE ABOVE ON SPECIFIC LOAN TAKEN AT RS.1.21 CRORES EACH FROM TWO PERSONS THE A.O. ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 4 DISALLOWED 8% INTEREST AS NOT FOR THE PURPOSE OF BU SINESS UNDER SECTION 36(1)(III) TO THE TUNE OF RS.9 44 514/-. THE THIRD DISALLOWANCE MADE BY THE A.O. IS WITH REFERENCE TO INVESTMENTS MADE IN THE S HARES AND PREMISES OF RS.1 17 97 222/- AT 12% INTEREST WHICH COMES TO RS. 14 15 600/- THE AMOUNT OF WHICH WAS NOT CONTESTED BY THE ASSESSEE. BEFORE ADVERTING TO THE DISALLOWANCE OF INTEREST IT IS TO BE CONSIDERED WHE THER THE ASSESSEE COULD HAVE SET OFF ALL THE ABOVE AMOUNTS INTO TO THE AMOU NT DISALLOWED FOR THE INVESTMENTS MADE IN SHARES OF PLOTS. ON EXAMINATION OF THE BALANCE SHEET THE A.O. WAS OF THE OPINION THAT INVESTMENT IN GROU P COMPANY SHARES AND PREMISES WHICH DID NOT YIELD ANY INCOME CANNOT BE C ONSIDERED FOR THE PURPOSE OF BUSINESS AND MADE THE DISALLOWANCE OF RS .14 15 600/- AND THE ASSESSEE HAS ACCEPTED THE DISALLOWANCE WITHOUT ANY CONTEST. AS SEEN FROM THE FINDINGS IN PARA 5 AND PARA 4 OF THE ORDER OF T HE A.O. THE DISALLOWANCE OF RS.9 44 514/- ON THE AMOUNTS BORROWED FROM TWO PART IES AT 18% IS CONCERNED IT WAS HIS FINDING THAT THE AMOUNTS WERE ADVANCED AT 10% AND THE REASONS FOR SUCH HIGH INTEREST ON BORROWALS AND LOW INTEREST ON ADVANCES WAS NOT PROPERLY EXAMINED. AS SEEN FROM TH E ABOVE TWO DISALLOWANCES THERE IS NO INTERCONNECTION BETWEEN THE TWO BORROWALS EVEN THOUGH THE BORROWED FUNDS TO THE EXTENT OF RS.23.69 CRORES WERE PART OF THE TOTAL BORROWALS MADE BY THE FIRM. SINCE THESE TWO D ISALLOWANCES ARE MADE ON TWO SEPARATE GROUNDS AND THE ASSESSEE HAVING ACC EPTED THE DISALLOWANCE ON THE INVESTMENTS MADE IN GROUP CONCERNS AND PREMI SES THE BENEFIT OF TELESCOPING CAN NOT ARISE. THE ALTERNATE PLEA MADE FOR TELESCOPING OF THE AMOUNT CAN NOT BE CONSIDERED. EVEN WITH REFERENCE TO THE DISALLOWANCE OF RS.51 500/- MADE ON PARTNERS WITHDRAWALS THE A.O. W AS VERY CLEAR IN DISALLOWING ONLY PROPORTIONATE INTEREST FOR THE PER IOD OF FUNDS WERE UTILISED BY THE PARTNERS OUT OF THE BORROWED FUNDS AND ONLY AN AMOUNT OF RS.51 900/- WAS DISALLOWED EVEN THOUGH THERE WAS DE BIT BALANCE TO THE EXTENT OF 9.95 CRORES AGAINST THE PARTNERS CURRENT ACCOUNT. THIS DISALLOWANCE WAS ALSO ACCEPTED BY THE ASSESSEE. WE ARE OF THE OPINION THAT THE CLAIM FOR TELESCOPPING CANNOT BE CONSIDERED ON THE FACTS. 8. NOW WITH REFERENCE TO THE MERITS OF THE DISALLOWANC E OF RS.9 44 514/- MADE BY THE A.O. THE A.O. VERY CATEGORICALLY CONSI DERED THE FOLLOWING ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 5 BORROWALS AGAINST WHICH HE GIVES A FINDING THAT THE AMOUNTS ARE ADVANCED AT 10% OUT OF THE TOTAL ADVANCE MADE BY THE ASSESSE E: - INTEREST LOANS 1. SHAILENDRA SINGH RS.10 62 579 RS.1 21 51 949 2. HARINDRA SINGH RS.10 62 579 RS.1 21 51 949 9. EVEN THE CIT(A) HAS ASKED FOR EXPLANATION WHY THE M OUNTS ARE ADVANCED AT LESSER INTEREST AND HIS FINDINGS ARE VE RY CATEGORICAL IN THE SENSE THAT THE ASSESSEE HAS FAILED TO GIVE ANY EXPLANATIO N AS TO WHAT NECESSITATED IT WHILE CARRYING OUT THE BUSINESS TO ADVANCE LOAN AT A LOWER RATE OF INTEREST THAN WHAT IT HAS PAID. HE FURTHER CONSIDERED THAT M ERELY RELYING ON GENERAL INTERPRETATIONS AND CITING CASE LAWS WILL NOT HELP IN THIS CASE IN THE ABSENCE OF FACTS AND EXPLANATIONS. BEFORE US ALSO THE LEARN ED COUNSEL MADE GENERAL PROPOSITIONS THAT AMOUNTS ARE BORROWED FOR THE PURP OSE OF BUSINESS AND IT WAS ASSESSEES PREROGATIVE IN ADVANCING AMOUNT AT A LESSER RATE. ASSESSEES CONTENTION THAT ONCE THE AMOUNTS ARE CONSIDERED BOR ROWED FOR THE PURPOSE OF BUSINESS THE A.O. HAS NO OPTION BUT TO ALLOW THE INTEREST PAID. THESE ARGUMENTS SEEMS PLAUSIBLE ON THE FACE OF IT BUT WHE N WE EXAMINE THE PROVISIONS OF SECTION 36(1)(III) THE ARGUMENTS CAN NOT BE ACCEPTED. PROVISIONS OF SECTION 36(1)(III) ARE AS UNDER 36. (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CL AUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THE REIN IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 ................ . (III) THE AMOUNT OF THE INTEREST PAID IN RESPECT O F CAPITAL BORROWED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION : [ PROVIDED THAT ANY AMOUNT OF THE INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR ACQUISITION OF AN ASSET FOR EXTENSION OF EXISTING BUSINESS OR PROFESSION (WHETHER CAPITALISED IN THE BOOKS OF ACC OUNT OR NOT); FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED FOR ACQUISITION OF THE ASSET TILL THE DATE ON WHICH SUC H ASSET WAS FIRST PUT TO USE SHALL NOT BE ALLOWED AS DEDUCTION.] EXPLANATION.RECURRING SUBSCRIPTIONS PAID PERIODIC ALLY BY SHAREHOLDERS OR SUBSCRIBERS IN MUTUAL BENEFIT SOCI ETIES WHICH FULFIL SUCH CONDITIONS AS MAY BE PRESCRIBED SHALL BE DEEMED TO BE CAPITAL BORROWED WITHIN THE MEANING OF THIS CLAUSE; ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 6 10. AS CAN BE SEEN THE A.O. HAS TO ALLOW THE AMOUNT OF INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSE OF BUSI NESS OF PROFESSION. THERE IS NO DOUBT ABOUT THE AMOUNTS BORROWED FOR THE PURP OSE OF BUSINESS OR PROFESSION. HAD IT NOT BEEN FOR THE PURPOSE OF BUSI NESS THE INTEREST AMOUNT WOULD HAVE BEEN DISALLOWED ENTIRELY AS RIGHTLY POIN TED OUT BY THE LEARNED COUNSEL. THERE IS NO DOUBT THAT THE FUNDS ARE BORRO WED FOR THE PURPOSE OF BUSINESS OR PROFESSION. HOWEVER THE ASSESSEE HAS T O BE ALLOWED SUCH AMOUNT OF INTEREST WHICH IS FOR THE PURPOSE OF BUSI NESS OR PROFESSION AND CERTAINLY THE RATE OF INTEREST AT WHICH IT IS CLAIM ED HAS A BEARING IN DECIDING THE AMOUNT OF INTEREST TO BE ALLOWED. IT WAS NOT EX PLAINED IN SPITE OF SPECIFIC QUERY WHY THE ASSESSEE HAS BORROWED AT 18% AND ADVA NCED AT 10%. WHEN THE ASSESSEE WAS CLAIMING INTEREST AT 18% ON THE BO RROWED FUNDS EVEN THOUGH THE AMOUNT BORROWED IS FOR THE PURPOSE OF BU SINESS THE RATE OF INTEREST AT WHICH IT IS BORROWED HAS A BEARING IN T HE COMPUTATION OF INCOME. THEREFORE THE A.O. HAS CERTAINLY TO VERIFY WHETHER THE RATE OF INTEREST IS APPROPRIATE FOR ALLOWING THE DEDUCTION UNDER SECTIO N 36(1)(III). SINCE THE ASSESSEE HAS NOT EXPLAINED THE RATIONALE IN ADVANCI NG AT LESSER INTEREST THAN THE BORROWED FUNDS AND AS SEEN FROM THE BALANCE SHE ET THE ASSESSEE HAD ADVANCED AN AMOUNT OF RS.8.19 CRORES AT LESSER RATE OUT OF THE TOTAL BORROWINGS OF RS.23.68 CRORES THE A.O. HAS CORRECT LY CONSIDERED THAT 8% OF THE INTEREST CANNOT BE ALLOWED UNDER SECTION 36(1)( III) SINCE THE ASSESSEE HAS NOT GIVEN THE REASONS FOR ADVANCING AT A LESSER RAT E OF INTEREST AND AS RIGHTLY POINTED OUT BY THE CIT(A) A MERE RELIANCE ON GENERA L PRESUMPTIONS AND CITING CASE LAWS CANNOT HELP THE ASSESSEE IN THE AB SENCE OF ANY RATIONAL EXPLANATION FOR BORROWING FUNDS AT HIGHER RATE OF I NTEREST AND ADVANCING AT LOWER RATE OF INTEREST IN THE BUSINESS OF FINANCING . THERE IS NO LOGIC IN ASSESSEES CONTENTION THAT THE AMOUNTS ARE TO BE AL LOWED FOR THE PURPOSE OF BUSINESS. WE ARE OF THE OPINION THAT THE A.O. HAS R IGHTLY DISALLOWED 8% OF THE INTEREST CLAIMED ON ONLY TWO AMOUNTS WHICH ARE SPECIFICALLY ADVANCED AND THERE WAS A NEXUS. ON THE FACTS OF THE CASE WE ARE IN AGREEMENT WITH THE ORDERS OF THE A.O. AND THE CIT(A). 11. THE HON'BLE SUPREME COURT IN THE CASE OF CORE HEALT H CARE LTD.(SUPRA) HAS ONLY CONSIDERED THE ISSUE WHETHER I NTEREST ON BORROWED ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 7 CAPITAL WHETHER FOR THE PURPOSE OF CAPITAL OR REVEN UE NATURE IS TO BE ALLOWED WHEN AN ISSUE WAS MADE THAT THE AMOUNT BORROWED FOR THE PURPOSE OF PURCHASE OF ASSET CANNOT BE ALLOWED UNDER SECTION 3 6(1)(III). THE PROVISO WAS INSERTED IN SECTION 36(1)(III) BY FINANCE ACT 2003 AND THIS PROVISO IS ALSO CONSIDERED BY THE HON'BLE SUPREME COURT IN HOLDING THAT THERE IS NO DISTINCTION MADE IN SECTION 36(1)(III) BETWEEN CAPI TAL BORROWED FOR REVENUE PURPOSE AND CAPITAL BORROWED FOR CAPITAL PURPOSE. T HE ASSESSEE IS ENTITLED TO CLAIM INTEREST PAID ON BORROWED CAPITAL PROVIDED TH AT THE CAPITAL IS USED FOR BUSINESS PURPOSE. THE RATIO OF THE ABOVE DECISION D OES NOT APPLY TO THE FACTS OF THE ASSESSEES CASE. THE ISSUE HERE IS NOT WHETH ER THE AMOUNT IS BORROWED FOR CAPITAL PURPOSE OR REVENUE PURPOSE BUT THE RATE OF INTEREST PAID IS APPROPRIATE OR NOT. MOREOVER THE ASSESSEE ALSO ACCE PTED THE DISALLOWANCE OF RS.14 15 600/- MADE BY THE A.O. THAT THE INVESTMENT S MADE IN SHARES AND PROPERTY ARE NOT FOR THE PURPOSE OF BUSINESS. IN VI EW OF THESE FACTS OF THE CASE WE ARE OF THE OPINION THAT THE ASSESSEES CLA IM OF INTEREST AT 18% CANNOT BE ALLOWED AS SUCH AND THE A.O. HAS CORRECTL Y RESTRICTED THE AMOUNT OF INTEREST TO 10% AND DISALLOWED THE BALANCE 8%. A CCORDINGLY THE GROUND IS REJECTED. 12. GROUND NO. 3 IS WITH REFERENCE TO DISALLOWANCE TO T HE EXTENT OF 10% OF MOTOR CAR EXPENSES AND GROUND NOS. 4 & 5 PERTAIN TO DISALLOWANCE OF 10% OF THE TRAVELLING AND CONVEYANCE EXPENSES NOT VOUCHED. 13. AFTER HEARING THE LEARNED COUNSEL AND THE LEARNED D .R. AND AFTER EXAMINING THE NATURE OF THE DISALLOWANCE FROM THE O RDERS OF THE A.O. AND THE CIT(A) WE ARE OF THE OPINION THAT THERE IS NO NEED TO INTERFERE WITH THE SAID DISALLOWANCES. 10% OF THE MOTOR CAR EXPENSES TOWARD S LACK OF LOG BOOK MAINTENANCE AND PERSONAL ELEMENT CANNOT BE CONSIDER ED EXCESSIVE OR UNREASONABLE AS THE SAME WAS RESTRICTED TO 10% BY T HE CIT(A) AGAINST 20% MADE BY THE A.O. WE CONFIRM THE SAME. SIMILAR IS TH E CASE WITH DISALLOWANCE OF 10% OF TRAVELLING AND CONVEYANCE EX PENSES AS THEY ARE NOT FULLY VERIFIABLE. IN THE ABSENCE OF PROPER VERIFICA TION BY THE A.O. DISALLOWANCE OF 10% OF THE EXPENDITURE IS REASONABLE AND ACCORDI NGLY THESE 3 GROUNDS ARE REJECTED. ORDER OF THE CIT(A) ON THESE ISSUES ARE C ONFIRMED. ITA NO. 2550/MUM/2009 M/S. SUHAMI POWER & FINANCE CORPORATION 8 14. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 17 TH FEBRUARY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XII MUMBAI 4. THE CIT XII MUMBAI CITY 5. THE DR I BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.