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2012 (12) TMI 1036 - ITAT CHANDIGARHDisallowance of interest u/s 36(i)(iii) - Held that:- As far as the advance to M/s Devbhumi Spinning & Weaving Mills is concerned, no purpose for the same was given before the Assessing Officer or the ld. CIT(A). Though before us, it was stated that the same was for the purpose of purchase of property but no evidence was filed before us, therefore, in the absence of any evidence it has to be concluded that money has been diverted for non business purpose. Since the assessee has admittedly borrowed huge amounts on interest, the proportionate interest has to be disallowed in respect of the advances made to M/s Devbhumi Spinning & Weaving Mills - remit the issue relating to the disallowance of interest on account of advance to M/s Balwindra Tools Pvt Ltd to the file of Assessing Officer to examine the iqrarnama filed before the first appellate authority and decide the issue in accordance with law. Disallowance of expenses of interest u/s 14A - Held that:- Investment made in a firm is to be treated as investment for earning exempt income - after introduction of Section 14A, it was possible to apportion the expenditure between taxable income and exempted income. The perusal of the assessment order shows as observed earlier, no where before the Assessing Officer or the ld. CIT(A), the assessee has made a specific mention to show which particular funds were borrowed for which particular requirement and in the absence of such specific utilization Rule 8D, would be applicable. Perusal of the assessment order shows that disallowance u/s 14A has been worked out on the basis of Rule 8D which is as observed earlier applicable in case of the assessee. Therefore, we set aside the order of the ld. CIT(A) and restore that of the Assessing Officer.
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