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2015 (4) TMI 628

Addition u/s 36(I)(iii) - whether introduction of provision of sec. 14A with retrospective effect, ITAT was justified in law and on the facts to delete addition coming under sec. 36(I)(iii) - Held that:- How does the interest paid or incurred by the assessee for earning exempt income become an expenditure allowable under section 36 of the Income Tax Act has not been explained by the learned Tribunal nor has Mr. Bagaria, learned Advocate for the assessee tried to make any improvement thereupon. Therefore, the finding given by the learned Tribunal is palpably wrong.

Admittedly, money was paid from the cash credit account. The position would have been different if the money had been paid from a current account or a savings account. Money was admittedly paid from the cash credit account and admittedly interest was also paid. Therefore, it was the obligation of the assessee to offer one to one explanation to establish that the money borrowed from United Bank of India was not spent for the purpose of purchasing the shares. Since the assessee did not discharge his obligation, the Assessing Officer had refused to allow the deduction. Without applying mind, the learned Tribunal upheld the contention of the assessee. We, therefore, propose to remand the matter to the Assessing Officer. - Decided in favour of the revenue.


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