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2021 (12) TMI 696 - ITAT JAIPURAddition of interest paid as expenditure in connection with business activities with certain suppliers of goods, job workers for manufacturing of goods of the appellant and added in the returned income - A.O. had not allowed deduction as business expenditure of interest paid on borrowings which had been given to other companies as well as firms in connection with the continuation of business i.e business expediency - HELD THAT:- Three ingredients are required for allowing interest paid which are as there should be borrowing of funds, borrowing should be for business purpose, and there should be payment of interest. The assessee fulfills all the above three conditions, as the assessee borrowed the funds from the bank as well as other, the borrowing was for the business purposes only and interest thereon was paid to the Bank as well as to others also. As all are the business transactions either of purchases/sale/Job work as well as payments/receipts through banks as the case may be in the business/Commercial expediency. In the business transaction neither the assessee paid any interest on delay payments against consideration to the above suppliers on their sale/Job Works, if any, nor charged any interest from them on delay payments received either as sale consideration or advances in connection with the commercial expediency. Considering the totality of facts and circumstances of the case, mater placed on record and the case laws relied upon by the ld. AR, we found merit in the contentions raised by the assessee and the ld. DR has not brought on record any new material to rebut or controvert the submissions and documents placed before us, therefore, we direct to delete the disallowances confirmed by the ld. CIT(A) - Decided in favour of assessee. Disallowance of interest to Bajaj Finance Ltd. - HELD THAT:- Assessee has taken finance from Baja] Finance Limited in 2011. The repayment was made accordingly to the monthly installment. As per the provisions, the assessee has debited TDS deducted on the interest paid in the account of the company. The assessee time and again required M/s Bajaj Finance Limited to reimburse the same. However, in spite of the repeated request no such reimbursement of the tax deducted at source was made. Accordingly during the year claimed the amount of TDS as interest in the profit & loss account. As the non recovery of the same is decided during the year, the same is current year expenditure and allowable during the year. However, the interest was deposited in the year under consideration, it must be allowed in any one of the years either the year under consideration on account of payment or in the preceding year being the relevant year, if the expenditure is allowed in this year under consideration even though there would be no any loss of revenue to the department because the rate of tax is one and the same for both the assessment years. Considering the totality of facts and circumstances of the case, we direct to delete the disallowance confirmed by the ld. CIT(A) - Decided in favour of assessee.
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