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2021 (8) TMI 1354 - AT - Income TaxDisallowance of interest u/s. 57 (iii) - proportionately disallowing interest on borrowing invoked alleging that entire borrowed funds were not utilized for the purpose of investment in partnership concerns - under the arbitration settlement with the partners, the assessee had to accept rights in respect of three flats in an under construction project at a somewhat high value - HELD THAT:- As rightly held by the assessee in respect of three flats, which are valued by the arbitrator at Rs. 3.25 crores, cannot be considered in isolation with assessee’s investment in the firm. The investment made by the assessee in the firm, to that extent, remains in existence-through in a different form because of the compulsion of a binding arbitration award rather than choice of the assessee. In this view of the matter, the disallowance is devoid of legally sustainable and factually correct basis. Therefore, direct the Assessing Officer to delete the impugned disallowance
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