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2018 (3) TMI 2017 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - CIT(A) deleted the addition - HELD THAT:- Admittedly assessee has not earned any exempt income during the year under consideration, accordingly we do not find any infirmity in the observations of Ld. CIT(A) in deleting the addition made by Ld.AO in respect of the disallowances computed u/s 14A. Interest free loan advanced to sister concern u/s 36(1)(iii) - assessee has diverted its interest bearing funds to its related person and accordingly interest @ 10.75% on interest free loans is disallowed - HELD THAT:- As decided in assessee’s own case for assessment year 2009-10 and 2010-11 CIT(A) has deleted the disallowance on the basis that nexus between interest bearing funds and interest free advance as well as adequacy of interest free fund available with the assessee, have not been analysed by the A.O. during the assessment proceedings, nor the explanation given by assessee that the loan was given for business purpose has been rebutted by the A.O. CIT(A) has concluded that the assessee having adequate non-interest bearing funds, it can be inferred that the loan given has no bearing on the interest expense claimed by assessee on borrowed funds. In absence of rebuttal of above stated material finding given by Ld.CIT(A) on the issue even before the Tribunal, we do not find reason to interfere with the first appellate order, which is comprehensive and reasoned one as well as supported by the ratio laid down in the above cited decisions Decided in favour of assessee. Addition being loan amount written off given to sister concern - AO disallowed alleged amount as the said amount written off was not taken as income in any preceding year, assessee is not in the business of giving loans, and that, conditions laid down in section 36(2) of the Act were not fulfilled - HELD THAT:- In the present case the write off of loss has not arisen during the course of business of assessee as money lending is not the activity that is carried on by assessee and it has never been the claim of assessee nor it has been proved before the authorities below. There has been no evidence that is placed on record to prove that the loss has occurred during the year. Therefore the claim of loss by assessee does not hold good on both these counts. The reasons given by CIT (A) to allow the claim as business loss are irrelevant and is without considering the provisions of the Act. CIT (A) also accepted that the issue stands covered in the favour of assessee by the decision of Hon’ble Gujarat High Court in the case of Manohar N Shah [2005 (10) TMI 37 - GUJARAT HIGH COURT] - loss was proved to have been arisen during the year which was actually a business loss. Therefore we are inclined to reverse the findings of Ld. CIT (A) and restore the order of Ld. AO. Decided in favour of revenue.
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