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2013 (3) TMI 122 - ITAT MUMBAIDisallowance of notional interest - AO noted that the assessee had borrowed heavy loans on which substantial interest running into crores had been paid. However, it was also noted by him that the assessee had given loans/deposits to certain parties on which no interest was charged. - It has been submitted by the assessee that loans and deposits had been given out of own funds and therefore, even if there was no connection with business, no disallowance could be made out of interest paid on borrowings. - held that:- three is no dispute that loans/deposits had been given from own funds as AO himself in para 4.3 of the order has noted that the assessee had used surplus funds for non business purposes. Once the loans/deposits have been given out of own funds, disallowance of interest paid on borrowings will not be justified. - Decided in favor of assessee. Deduction u/s 80IB - industrial undertaking - held that:- deduction under section 80IB will be allowable in respect of sales tax set off and excise duty rebate but not in relation to the rental and interest income. - partly in favor of assessee. Penalty u/s 271(1)(c) - held that:- Considering the smallness of the amount and this being the first year of amended provisions, in our view the claim of depreciation at a higher rate has to be considered due to bonafide mistake. Therefore, in our view it is not a fit case for levy of penalty for concealment of income when all necessary details had been filed with the return of income. - Penalty deleted.
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