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2016 (3) TMI 1230 - AT - Income TaxDisallowance of interest free advance to Nihal Singh Pahwa Charitable Hospital - Held that:- No hesitation in holding that no disallowance of interest can be made in this case; particularly when the advances are made out of the own funds of the assessee and the amount advanced to the sister concern / hospital / trust was by way of commercial expediency. Accordingly, we delete the disallowance made us/ 36(1)(iii) of the Act. - Decided in favour of assessee. Addition u/s 14A - Held that:- No disallowance u/s 14A /Rule 8D of the I.T. Rules can be made if investment is out of own funds and reserves. We may also add here that Rule 8 D of I.T. Rules, 1962 is not applicable to the year under consideration in this case. However, Rule 8-D is applicable from assessment year 2008-09 as it has been held by the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). Even on this score also, we hold that disallowance made by the Assessing officer and confirmed by the CIT(A) is bad in law. - Decided in favour of assessee. Penalty u/s 271(1)(c) - Held that:- There remains no basis for levying the penalty u/s 271(1)(c) of the Act for furnishing the inaccurate particulars of income. It is well settled law that where the additions made in the assessment order, on the basis of which penalty u/s 271(1)(c) was levied, are deleted, there remains no basis at all for levying the penalty u/s 271(1)(c) of the Act and, therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. - Decided in favour of assessee.
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