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2015 (10) TMI 2718 - ITAT MUMBAIDisallowance of finance charges - utilization of loans taken - nexus of interest expenditure with the income earned - Held that:- The income of the assessee consisted of consultancy fee, royalty income, trade mark fee, share of profit& interest on capital from firm, dividend income etc. A.R also fairly admitted that the funds were taken from Vithal Kamat (HUF) over the years in many instalments and they have been utilized for all the purposes. Thus, the exact utilization of loans taken from Vithal Kamat (HUF) could not be proved at this stage. Hence, as submitted by Ld D.R, the nexus of interest expenditure with the income earned by the assessee could not be established by the assessee. Thus the Ld CIT(A) was justified in confirming the disallowance of interest expenditure. - Decided in favour of revenue Disallowance u/s 14A - Held that:- The finance charges was disallowed u/s 36(1)(iii) and hence the same has already been excluded by the Ld CIT(A). The remaining expenses, in our view, could not be linked to the dividend income. Hence we agree with the contentions of Ld A.R that no disallowance of expenditure is called for in terms of Rule 8D(2)(iii) of the I.T Rules. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the disallowance of expenses confirmed by Ld CIT(A) u/s 14A - Decided in favour of assessee
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