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2021 (5) TMI 408 - AT - Income TaxInterest free advances given by the assessee to its group concerns - CIT (A) who deleted the addition made by the AO by observing that the interest free loans and advances were extended as a measure of commercial expediency - no loss to the Revenue for not charging interest by the assessee from the group concerns as the assessee and other group concerns were paying the taxes at the maximum marginal rate - whether the interest free advances were given by the assessee to its group concern as a measure of commercial expediency? - HELD THAT:- The group concern of the assessee have rendered services to the assessee in the year under consideration as well as in the immediate preceding year. The debit notes/invoice issued by these parties are placed on sample basis. Thus from the above, it is clear that the advances were extended by the assessee to the group concern as a measure of commercial expediency. In addition to the above we also find that the assessee and its group concerns were paying the taxes at the maximum marginal rate as evident from the income tax acknowledgements of its group companies. Accordingly we hold that there was no loss to the revenue for not charging interest on the amount extended by the assessee as interest-free loan to its group companies. As decided in DELOITTEE HASKINS & SELLS, AHMEDABAD. [2019 (10) TMI 349 - ITAT AHMEDABAD] once it is established that there is nexus between the expenditure and the purpose of business, the revenue cannot assume the role to decide as to how much is reasonable expenditure. Apart from this, the Ld. first appellate authority has also noted that the assessee firm had its own funds which were more than the amount of advances given therefore, there was no occasion for the assessing officer to make disallowance on account of interest - Decided in favour of assessee. TDS u/s 194I or 194C - short deduction of TDS - Addition u/s 40(a)(ia) - payments to the Hotels either without deducting the TDS or deducted TDS at the rate lower than the rate prescribed under the Act - HELD THAT:- The assessee in the case on hand has deducted the taxes and also deposited the same but as per the AO same is deducted in wrong section resulting in short deduction. However there the assessee cannot be held in default under section 40(a)(ia) of the Act. Provisions of TDS with respect to the room charges will be applicable where the hotel accommodation was taken on regular basis. The CBDT in its circular number 05 of 2002 dated 30-07-2002 has clarified that where the rooms have been earmarked for a specified rate and for the specified period, then it shall be construed as accommodation available on regular basis. However in the case on hand there is nothing coming from the order of the AO suggesting that the rooms have been earmarked by the assessee for a specified period and specified rate. We hold that there cannot be any disallowance on account of non-deduction of TDS under section 194-I of the Act. Hence we uphold the finding of the learned CIT (A). Thus the ground of appeal of the Revenue is dismissed
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