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2022 (3) TMI 36 - ITAT AHMEDABADDisallowance of interest u/s 36(1)(iii) - interest free loans and advances given by the assessee - HELD THAT:- We have gone through the order of the ITAT in the case of assessee in assessment year 2010-11 [2019 (2) TMI 2004 - ITAT AHMEDABAD] and we have noted therefrom that the ITAT on finding that the assessee’s pleadings, that it had sufficient own funds to cover the advances for business purposes, was not adjudicated despite specific submissions made before the lower authorities, restored the issue back for adjudication afresh. Considering presumption of utilization of own funds for making interest free business advances in the case of Reliance Industries [2019 (1) TMI 757 - SUPREME COURT] and noting the fact that the sufficiency of own funds was pointed out by the assessee ,and further considering the order of the ITAT in the case of the assessee itself in the preceding year assessment year 2010-11 restoring identical issue back to the AO for adjudication considering the availability of own funds for making interest free advances, we consider it fit to restore this issue back to the A.O. to adjudicate the issue afresh in the light of the aforesaid submissions made by the assessee.The AO is directed to verify the fact of availability of own interest free funds with the assessee for making the impugned interest free advances - Ground allowed for statistical purposes. TDS u/s 195 - Disallowance of expenses invoking the provisions of section 40(a)(ia) - non-deduction tax at source on payments made for export clearing and forwarding charges, shipping freight and export expenses - contention of the assessee that no tax was required to be deducted on same, being payments made to agents of non-resident shipping companies for freight and for payments made on behalf of the non-residents - HELD THAT:- Undeniably the disallowance of expenses u/s. 40(a)(ia) of the Act has been made for want of evidences without considering the contentions advanced by the assessee on merits,but ld. Counsel for the assesee has demonstrated that the evidences were filed to the lower authorities. The issue therefore needs to be adjudicated on merits. We therefore consider it fit to restore this issue back to the A.O. to adjudicate it afresh in accordance with law after considering and verifying the evidences filed by the assessee, and the contentions made by the assessee. Needless to add due opportunity of hearing be granted to the assessee - Ground allowed for statistical purposes. TDS u/s 195 or 194A - Disallowance of expenses relating to payments made to non residents as per the provisions of section 40(a) - HELD THAT:- Undeniably the interest paid to Barclays Bank by the assessee has been added to the income of the assessee for non deduction of tax at source thereon as per section 195 of the Act treating the said Bank to be a non resident. The order of the Ld.CIT(A) in the case of the assessee however for another A.Y ,i.e A.Y 12-13 reveals that Barclays Bank was found to be a resident and no tax deductible on the interest payment made to it as per section 194A of the Act. The fact of the status of the Bank therefore appears contradictory and in the absence of the same having been examined as per law at any stage in the impugned year, this issue is also restored back to the AO for adjudication afresh . The AO is directed to determine the residential status o f the Bank to which the impugned payment of interest is made and consider the findings of the Ld.CIT(A) in A.Y 2012-13 for the same. He may thereafter adjudicate the issue of disallowance of the expense for non deduction of tax at source in accordance with law. Ground allowed for statistical purposes.
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