Disallowance of interest on ad hoc basis on the plank that Interest-Bearing Funds are diverted not admissible

Guardian Nutrition & Health Supplements Pvt. Limited Vs ACIT (ITAT Delhi) Brief facts of the case are that assessee is engaged in the business of rental trading of pharmaceutical products. In the present case, Assessing Officer (AO) made proportionate disallowance of interest on ad hoc basis after noting that assessee had both interest bearing funds and interest free funds at his disposal. We note that the disallowance has been made on ad hoc basis on the plank that interest bearing funds have been diverted. This was done by the AO despite noting that assessee had interest bearing funds as...