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2019 (11) TMI 1450 - ITAT MUMBAIDisallowance of interest u/s 57 - AO disallowed the claim of deduction of interest on the ground that the said liability is provisional as well as contingent in nature - AO observed that the assessee was claiming interest expenditure on the amount outstanding to the said related notified broker entities, however, these broker entities were not charging on the other clients - HELD THAT:- When the amounts were advanced to certain notified persons in order to comply with the directions of the Hon’ble Special Court with specific directions for utilisation of those funds subsequently also, the assessee cannot be fastened with a notional interest liability while complying with the said directions of the Hon’ble Special Court. Prepaid taxes paid by the assessee in the form of TDS, wealth tax, income tax and advance tax has got no relevance with the borrowings of the assessee as admittedly those were paid by the assessee over the years out of the income earned by the assessee in several years and out of maturity proceeds of fixed deposits / sale proceeds of shares. Hence, there cannot be any assumption that the borrowed funds were used by the assessee for making payments towards the aforesaid taxes. We find that in any case, assessee is having sufficient own funds in its kitty as is prevalent in the balance sheet and hence, there cannot be any disallowance of interest on that count itself. Reliance in this regard is placed in case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]. Hence, we direct the ld. AO to delete the disallowance of interest - Decided in favour of assessee.
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