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2021 (2) TMI 677 - ITAT PUNEDisallowance u/s.40A(3) - assessee was engaged in the land plotting business and had purchased the plots as stock-in-trade paying in cash - cash purchases, ex-facie, violated the provisions of section 40A(3) - diversified decisions - HELD THAT:- As found as an admitted position that the assessee as well as the seller of the plots had bank accounts at the material time and still the transaction was carried out in violation of section 40A(3) without bringing the case in any of the specific clauses of Rule 6DD. On an overview of the view canvassed by various Hon’ble High Courts on the point - some deleting the disallowance on the basis of the genuineness of the transactions while others sustaining the disallowance - what matters for the Tribunal is to follow the binding precedent, being, the judgment of Hon’ble jurisdictional High Court. That being the position, the Pune Tribunal is bound by the judgment of the Hon’ble jurisdictional High Court in Madhav Govind Dulshete [2018 (10) TMI 869 - BOMBAY HIGH COURT] sustaining the disallowance in case of cash payments exceeding the stipulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, we uphold the disallowance sustained in the first appeal. This ground fails. Addition u/s 14A read with Rule 8D - Interest disallowance - HELD THAT:- Authorities below did not accept the contention, in principle, by opining that interest free funds available with the assessee could not be deemed to have been utilised for making investments in sources yielding exempt income. In this regard, it is noticed that the Hon’ble Supreme Court in CIT (LTU) Vs. Reliance Industries Limited [2019 (1) TMI 757 - SUPREME COURT] has approved the view that where interest free funds available with the assessee were sufficient to meet its investment and at the same time loan was raised, it can be presumed that the investments were made from interest free funds and hence, no disallowance of interest should be made to that extent. It is appropriate to send the matter back to the file of AO for examining the assessee’s contention about the availability of interest free funds available with him and then decide the amount of interest disallowable u/s.14A. Appeal is partly allowed for statistical purposes.
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