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2018 (3) TMI 1341 - AT - Income TaxDisallowing the interest expenses - Held that:- In this case, the facts are peculiar that the assessee himself stopped the AO from making further inquiry into nexus by admitting this disallowance. When this amount was contested by assessee in appeals, we are of the view that let the AO be also given fair opportunity to examine the nexus. In case he could not be able to establish the nexus he has to follow the decision of Hon’ble High Court in the case of Reliance Utilities and Power Limited (2009 (1) TMI 4 - BOMBAY HIGH COURT). We remand the matter back to the file of AO for fresh adjudication. Disallowance of commission for short deduction of TDS u/s 194H - addition invoking the provisions of section 40(a)(ia) - Held that:- As regards to the short deduction of TDS no disallowance under section 40(a)(ia) of the Act can be made in view of the decision of Hon’ble Calcutta High Court in the case of CIT vs. S.K. Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT) and CIT vs. Kishore Rao and Others (2016 (4) TMI 430 - KARNATAKA HIGH COURT). Adhoc disallowance by invoking the provisions of section 40A(2b) being payments made to related parties - Held that:- Prices paid for purchase of jewellery by the assessee company seems to be fair and reasonable and therefore, no part of such price is required to be disallowed by invoking the provisions of Section 40A(2)(a) for the reason that the AO is unable to bring anything on record which proves that the price paid by assessee is excessive or unreasonable. Accordingly, we delete the disallowance and allow this issue of assessee’s appeal. Disallowance of service charges on adhoc basis - Held that:- AO is unable to prove the non-genuineness of the expenditure despite the fact that the assessee has deducted TDS on this expenditure and also paid service charges. Further, entire details were available with the AO and he has not carried out any examination of any of the parties and without that adhoc disallowance at the rate of 25% of the expenditure was made. It means, that the AO has accepted the genuineness of the expenditure and once genuineness of the expenditure is accepted, AO cannot disallow the same on adhoc basis. We delete the disallowance and allow this issue of assessee’s appeal.
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