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2011 (9) TMI 277 - AT - Income TaxAccommodation entry - Undisclosed income - held that:- keeping in view of the fact that the transactions were duly recorded by assessee and the transactions are made by account payee cheques and the interest on the said transactions have been paid after deduction of TDS and that AO should have enucleated or brought on record unassailable, concrete and incontrovertible facts that could have clinched the issue in the Departmental favour as observed by ld. CIT(A). - Order of CIT(A) deleting additions upheld. Interest Free Advances - Commercial expediency - the assessee borrowed funds form the bank on interest and lent it to sister concern without charging any interest - Held that:- On these facts it cannot be alleged that the said current account transactions with Mauria Udyog were not based on any commercial expediency whatsoever. - Held that:- In respect of advance of Rs.50,00,000/- such disallowance is called for in view of the fact that such advance was given for earning income exempt from Income-tax. Therefore, in any case proportionate expenses on interest attributable to this amount of advance of Rs. 50.00 Lacs should be disallowed u/s. 14-A (1) of the Act. - before applying the provisions of section 14A of the IT Act the disallowance can be made only if there is actual nexus between the tax free income and expenditure. Therefore, we direct AO to apply provisions of section 14A of the IT Act after analyzing the facts of the present case.
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