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2005 (2) TMI 91 - HC - Income TaxDisallowance under section 40A(8) - "Whether Tribunal was legally correct in upholding the finding of the Commissioner of Income-tax (Appeals) that disallowance u/s 40A(8) could be made only with reference to the interest paid to the directors and their relations on their deposits and not of others?" - We find that u/s 40A(8), 15 per cent, of expenditure incurred by a company by way of interest in respect of any deposit received by it is to be disallowed. The disallowance is not restricted to deposits made by the directors or their relatives. It is applicable to all and sundry and wherever interest is paid, 15 per cent, of the amount is to be disallowed. In this view of the matter, the Tribunal was not justified in holding that the disallowance is to be restricted on the amount of interest paid to the directors and their relatives.
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