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2018 (7) TMI 948 - AT - Income TaxDisallowance of interest expenses - CIT-A deleted the disallowance - assessee has pleaded that it has sufficient interest free funds out of which it could easily advance these interest free loans to the sister concerns. - Held that:- It is pertinent to observe that in the assessment year 2006-07, the assessee firm was having interest free funds of ₹ 1,59,23,2625/- whereas at the close of the account, advance outstanding against the name of Antai Balaji Ltd was of ₹ 24,22,185/-. Similarly in the assessment year 2007-08, the assessee was having interest free funds of more than ₹ 4.63 crores against the outstanding of ₹ 24,22,185/-. Similar is the position with regard to the assessment year 2008-09. The assessee was having sufficient interest free funds out of which it could give interest free funds to associate concerns. The ld.CIT(A) has rightly deleted the addition Disallowance of equipments hire charges and warehouse rent charges - CIT(A) has deleted disallowance by holding that during the course of search no incriminating material was found showing excess payment - whether there is any income from this activity, and if it has income, then expenditure of this nature has any nexus with this gross receipt? - Held that:- AO nowhere considered whether the activity undertaken by the assessee gives rise to income of more than ₹ 4.51 crores in the assessment year 2007-08 and ₹ 4.88 crores in the assessment year 2008-09 would require expenditure. AO has made disallowance without any application of mind in sweeping manner. He has not made reference to any seized material found during the course of search and also not made any analysis of business needs and the expenditure debited by the assessee. He has simply disbelieved claim of the assessee on the ground that the expenditure were debited on the last date. To our mind, this approach of the AO is unacceptable.CIT(A) has considered the issue in right perspective and rightly deleted the addition - assessee appeal allowed
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