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2017 (7) TMI 256 - AT - Income TaxDeduction of eligible profits under the provisions of section 80IB - Held that:- Identical addition relating to scaling down of deduction claimed under section 80IB of the Act by the Assessing Officer passed in block assessment and survey conducted on assessee’s premises was considered. The Tribunal, we find upheld the order of the CIT (Appeals) whereby the action of the Assessing Officer was set aside, relying upon the order of the Tribunal in the appeal relating to block assessment proceedings for the period 1.4.1996 to 5.2.2003. Thus we uphold the order of the CIT (Appeals) in deleting the addition made on account of restricting the deduction claimed under section 80IB to 75% as against 100% claimed by the assessee. As a result ground raised by the Revenue is dismissed. Disallowance of interest on non business interest free advances u/s 36(1)(iii) - Held that:- Section 36(1)(iii) have laid down the proposition that where there are sufficient interest free funds available, the presumption in such cases would be that the advances have been made out of the same and hence there can be no occasion for making disallowance of any interest on account of the interest free advances made. We are in complete agreement with the Ld.Counsel of the assessee in this regard. Moreover we find that the LD CIT(A)has given a factual finding in this regard stating that the amount advanced interest free is far less than the share capital and free reserves of the assessee company. No infirmity in the order of the Ld.CIT(A) deleting the disallowance made on account of interest u/s 36(1)(iii) - Decided against revenue Disallowance u/s 14A - non recording of satisfaction - Held that:- Assessing Officer made disallowance by stating that, had the advance not been adjusted against share capital, the same would have been returned to banks reducing liability to interest of the company. Thus, we find that there was no satisfaction of the AO that the assessee had incurred any interest expenditure while making the impugned investments and least of all based on any credible evidence in this regard. The AO, we find, did not establish any nexus between interest bearing funds and the investments made. In the absence of satisfaction of the Assessing Officer with respect to incurrence of expenses for earning exempt income which is a sine qua non for invoking section 14A of the Act no disallowance under section 14A of the Act could be made - Decided against revenue
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