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2014 (2) TMI 843 - AT - Income TaxReduction in capital advances given to suppliers - Acquisition of land from Capital-Work-in- Progress Held that:- The assessee has merely given the advances to the suppliers/contactors/sellers and the expenses have not been actually incurred - Nor any bills have been raised by the persons to whom the advances have been made the CIT(A) has rightly held that the said advances given by assessee towards expenditure that may arise or may arise in future cannot be said to be capital in nature -there is no confirmation regarding expenditure incurred or to be incurred by assessee Decided against Assessee. Disallowance u/s 14A r.w Rule 8D of the Act Held that:- The contention of the assessee has merits that no borrowed funds were used by assessee for making the said investment - the borrowed money was taken by assessee from IDFC as secured loan which the assessee could utilized only for setting up hotel project the disallowances of out of interest is not justified - AO has made disallowance of expenses as per Rule 8D(iii) of the Rules, the formula prescribed by Legislature which is applicable from assessment year under consideration - there is no arbitrarily disallowance, made by AO but has followed the statutory formula to make the disallowance towards attributable administrative expenses there is no need to interfere in the decision of CIT(A) in confirming the disallowance Decided partly in favour of Assessee.
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