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2017 (1) TMI 678 - AT - Income TaxAddition under the head notional interest - Held that:- We find that the assessee had advanced loan from its interest free funds and had not charged any interest, that the AO had taxed notional interest in the hands of the assessee without bringing any evidence of charging of interest by the assessee. He has also not explained as to how the interest income accrued to the assessee. In the normal course of its business transaction the assessee had advanced loan and had not charged any interest. Charging or not charging of interest is a discretion of an assessee-especially when the advance is made out of interest free funds. We are of the opinion, that the order of the FAA does not suffer from any legal infirmity - Decided against revenue Disallowance made u/s. 14A - Held that:- We find that the FAA had disallowed the expenditure that was claimed against the exempt income. The basic concept for disallowance u/s. 14A of the Act r. w. r. 8D of the Rules is to deprive the assessee of double benefit i. e. claiming deduction against tax free income. In the case under consideration the FAA has restricted the disallowance to the extent it was claimed against the exempt income. In our opinion there is no need to interfere with his order. So, confirming the same second ground is decided against the AO.
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