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2015 (11) TMI 1369 - AT - Income TaxDisallowance u/s 14A - Held that:- The disallowance u/s.14A of the Act can be made only, if the expenditure is related to investment wherefrom the exempt income is earned. In the present case, the ld.CIT(A) has not considered the submissions of the assessee that investments have been out of interest-free fund, for commercial expediency and the dividend income has been offered for tax. Therefore, we are unable to confirm the finding of ld.CIT(A). In the light of above discussion, we hereby direct the AO to delete the addition - Decided in favour of assessee. Disallowance of 14 % interest being amount advanced to Shreenidhi Textiles by holding that there is difference between commercial expediency and humanitarian consideration - Held that:- The contention of the assessee is that the advance was given out of interest-free funds. It is also contended that similar advances were made during the AY 2007-08, in that year no such disallowance was made. This contention was not made before the ld.CIT(A). Therefore, in our considered view, the contention of the ld.counsel for the assessee that had it sufficient interest-free funds and the advance was given out of interest-free funds requires verification at the end of the AO and, accordingly, we hereby set aside the order of the authorities below and restore this issue to the file of AO to verify whether the advance was out of interest-free funds available with the assessee or not. In case, the AO finds that the assessee was having sufficient interest-free funds, he should also delete the disallowance made in respect of advances given to Shree Nidhi Textiles. - Decided in favour of assessee for statistical purposes.
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