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2014 (12) TMI 98 - AT - Income TaxDisallowance u/s 14A – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that while working out the disallowance u/s. 14A of the Act, the net interest should be considered – thus, the matter is remitted back to the AO to work out the disallowance on the basis of net interest – Decided in favour of assessee. Disallowance out of interest payment – Held that:- The total amount of ₹ 4,87,53,200/- borrowed by the appellant on different dates and paid interest, the inadmissible rate of interest which requires to be added to appellants income comes to ₹ 32,31,486 – in assessee’s own case for the earlier assessment year, it has been held that the need of business is to be judged from the point of view of businessmen - The amount which the assessee may need for his business may not be available always to the assessee - the assessee has to avail the loan amount when it is available by keeping in view the future needs which may arise in the course of business - merely as because the assessee had sufficient own funds on the date of the borrowings it cannot be concluded that borrowings it cannot be concluded that borrowings were not for the purpose of business - CIT(A) was not justified in sustaining the disallowance and is to be set aside – Decided in favour of assessee. Rate difference/commission paid to peta dealers – Held that:- CIT(A) rightly was of the view that the payment of ₹ 34,78,373/- is relatable to appellants sale of 623.02 crore bidi’s - their exist a direct relationship between commission paid and the corresponding sales - once there existed an evidence that an amount of commission flowed from appellant to peta dealers through agents, a disallowance on the absence of commercial expediency was not required to be made - For establishing genuineness of a commission, what is required to be proved is whether it was actually paid, whether the payment was relatable to a genuine business transaction, whether the party to whom payment was made is identifiable, whether the payment was made using banking channels and necessary entries recorded in the books of a/c and whether requisite TDS if any, was made on the amounts of commission paid, whether the parties to whom commission was paid have in turn included the same in their books of accounts / return of income etc. – the order of the CIT(A) is upheld – Decided against revenue.
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