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2018 (5) TMI 2093 - AT - Income TaxDisallowance of expenditure - addition made as not carried out any business activity - CIT-A restricted the disallowance to the 2/3rd of the total expenditure following the order of his predecessor for assessment year 2007-08 which was further confirmed by the Tribunal - HELD THAT:- As assessee could not convince us as to the business activity carried out by the assessee requiring the allowance of the entire expenditure claimed. We, therefore, do not find any reason to interfere with the above order of CIT(A) on this issue. Ground No.1 of the appeal is therefore, dismissed. Notional disallowance of the interest expenditure u/s 36(i)(iii) - giving loans to sister concerns at low interest - Proof of business expediency - AO observed that during the year it had obtained term loan on which the assessee had paid interest @ 11% to the bank. However, the assessee during the year had also given loan / advance to its sister concern and charged interest @ 8% - HELD THAT:-We find that the case of the assessee is thus squarely covered by the aforesaid decisions of the Hon'ble Supreme Court in the case of ‘Hero Cycles P. Ltd v CIT’ [2015 (11) TMI 1314 - SUPREME COURT] and ‘Bright Enterprises Pvt Ltd Vs. CIT’ [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] and Reliance Utilities and Power Ltd.’ [2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein the Hon'ble Courts have held that where the own funds of the assessee were sufficient to meet the interest free advances given during the year, then the presumption would arise that such advances or investments had been made out of the own funds of the assessee - disallowance to be deleted - Decided in favour of assessee.
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