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2017 (5) TMI 1511 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) for making interest free advance to various persons - Held that:- We find that it is a fact that in original assessment proceedings, the Assessing Officer had made disallowance of interest u/s 36(1)(iii) in respect of 10 parties , whereas the Assessing Officer in the second round of proceedings examined 14 parties and made disallowances accordingly which is not as per directions of Hon'ble ITAT. Therefore, we direct the Assessing Officer to restrict the disallowance if any in respect of only 10 parties which were originally listed in the original assessment order. We further find that in a few cases, the amount of advances was as opening balances and there are judgments of Amritsar Tribunal holding that in respect of old advances from earlier years, no disallowance u/s 36 (1) (iii) was warranted. Further the disallowance if any u/s 36(1)(iii) has to be restricted to the amounts of loans which exceeded the capital of the assessee as has been held by Hon'ble Amritsar Bench in various case laws relied on by assessee. Therefore, the Assessing Officer is directed to restrict the disallowance of interest on loan amounts exceeding the available capital of the assessee. With these directions the appeal of the assessee is set aside to the office of Assessing Officer to reframe the assessment order in terms of above said directions. - Decided in favour of assessee for statistical purposes.
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