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2018 (1) TMI 782 - AT - Income TaxDisallowance made under section 14A r/w rule 8D - Held that:- The assessee’s submissions before the Departmental Authorities was restricted to the additional disallowance proposed and made by the Assessing Officer under section 14A r/w rule 8D. The issue as raised by the assessee before us to the effect that the suo–motu disallowance made by the assessee even has to be deleted is a completely new issue raised for the first time before us. Therefore, for the purpose of giving a fair opportunity to the Department to have its say on assessee’s aforesaid claim, we restore the matter back to the file of the Assessing Officer for adjudication. Disallowance of interest expenditure under section 36(1)(iii) / section 57(iii) - Commissioner (Appeals) disallowed 6% out of interest expenditure incurred by the assessee only on the reasoning that while the assessee has paid interest @ 18% on the borrowed fund it has received interest @ 12% on interest bearing advances made to the joint venture - Held that:- The rate of interest at which the assessee has borrowed funds cannot be made applicable to the interest bearing advances made to the joint venture as the joint venture is constituted by the partners and the assessee apart from receiving the interest income has also a share in the distribution of the income of the joint venture. Moreover, the interest bearing advance to joint venture being made only for the purpose of business no disallowance out of interest expenditure can be made. Grounds raised by the assessee on this issue in both the appeals are allowed.
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