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2016 (5) TMI 1182 - AT - Income TaxDisallowance of additional depreciation on tooling cost recovered from the customers - Held that:- From the facts it is quite clear that the assessee first adds the amount of tools and dyes to its capital assets and claims the depreciation on the same. At the time when it gets reimbursed for the same, the same is reduced from the opening balance. This way, the assessee is getting additional benefit on account of depreciation claimed on the tools and dyes which have been reimbursed by the clients to it by claiming additional depreciation on the same - Decided against assessee Disallowance of interest u/s 36(1)(iii) on loans raised for business purposes - Held that:- In consonance with the order of the I.T.A.T. in assessee's own case for the earlier assessment year and also taking into consideration the fact that the bank rate in this year is around 15.7%, we hereby hold 16% rate of interest to be reasonable, as these are unsecured loans and are always available at a rate higher than the bank rates. - Decided partly in favour of assessee Disallowance of interest u/s 36(1)(iii) on alleged interest free advance ignoring the facts that the said advance was given out of own funds - Held that:- 5. Once, it is established that for a given situation, the assessee has not borrowed any money, for that matter, putting it reverse, the assessee has used his owned funds or interest free funds, there is no question of proving that the funds so taken from owned or interest free funds are used for business purposes. There being no claim of any interest expenditure, no question of deduction to be allowed under section 36(1)(iii) of the Act arises. Once it is presumed that the lending as in the present case is made out of owned funds, assessee need not show the business expediency for the same. An assessee or for that matter any person is free to use his own funds the way he wants. In the present case, as the assessee has used owned funds for such lending, we do not find any need to go into the question of commercial expediency - Decided in favour of assessee
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