Section 37, 57 of Income Tax Act, 1961— In the instant case, appeal is filed by assessee. The Ground No. 1 the grievance of the assessee relates to the confirmation of disallowance of Rs. 15,44,043/- out of interest account made by the A.O.

Vide Ground No. 2 the grievance of the assessee relates to sustenance of disallowance of Rs. 2,01,874/- out of car expenses, depreciation, telephone and travelling expenses when the assessee himself had disallowed a sum of Rs. 1,74,371/- out of the above said expenses.

Held that— In the present case the A.O. made the disallowance for the reasons that the assessee could not explain to his satisfaction that the interest paid on the loans was having any nexus with interest income earned under section 57 of the Act. On the contrary the claim of the assessee is that interest bearing funds were utilized for the business purposes and the interest paid in similar circumstances was allowed in the earlier year i.e 2012- 13 by the ITAT vide order dt. 22/04/2019 in ITA No. 315/Chd/2017 in assessee’s own case. I therefore deem it appropriate to set aside this limited issue to the file of the A.O. to be adjudicated by keeping in view the observations given in the aforesaid order, in accordance with law.

In my opinion in such type of cases the use of Telephone and Car for personal purposes cannot be ruled out, however the disallowance made by the A.O. and sustained by the Ld.CIT(A) @ 1/5th of the expenses appears to be excessive, I therefore to meet the ends of justice, deem it appropriate to restrict the disallowance to 1/10th of the expenses incurred by the assessee on Telephone, Car and depreciation instead of 1/5th worked out by the A.O. while restricting the above disallowance the A.O. should also give the benefit of the disallowance already made by the assessee at Rs. 1,74,371/-.[SHRI DHARAM PAL AGGARWAL VERSUS ACIT CIRCLE-6 LUDHIANA, PUNJAB] [2019] 16 ITCD Online (27) [ITAT CHANDIGARH]