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2018 (7) TMI 2115 - ITAT BENGALURUExpenditure under the heading ‘Contractors’ Benevolent Fund’ (CBF) - Expenditure is not allowable u/s.37 - HELD THAT:- Contractor is under an obligation to deduct tax by notification issued by the Government of Karnataka, dt.18.1.2007 to make the payment of CBF which is equivalent to 1% of the estimated cost of the contract and therefore this is an expenditure which is wholly and solely related to the business of the assessee. In our view, whether actually this amount is spent by the assessee for the purposes of business is required to be verified by the A O with reference to the bills / running bills submitted by the assessee. We remand the matter back to the file of the AO with a direction to verify whether the assessee had made the contribution to CBF in pursuance to the notification dt.18.1.2007 or the corrigendum issued. If the payment of CBF is made in accordance with the said notification then the same shall be allowed after verification. Disallowance of the interest paid to NBFC u/s.40(a)(ia) - HELD THAT:- Since the assessee has filed the confirmation letter in proof of paying the interest against loans given by NBFC and therefore in the fitness of things, it is required that the facts are required to be verified by the AO after affording opportunity of being heard to the assessee. In the light of the above, we remand this issue also to the file of the AO to verify whether the assessee had paid interest to NBFC or not and whether the NBFC had shown the interest as income in its books of account and return of income. If it has been done then the AO shall allow the amount.
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