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2019 (4) TMI 1655 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) on proportionate basis - assessee is in the business of financing having mixed funds in its kitty i.e own funds as well as borrowed funds - it had borrowed monies at an average rate of interest at 13.5% and lent to various persons at an average rate of interest at 12.40%. - disallowance of interest u/s 36(1)(iii) by applying the differential rate of interest at 1.1% - test of commercial expediency - HELD THAT:- Once the lending is meant in the ordinary course of financing activities of the assessee company, then charging / non-charging of interest or charging of interest at a lesser rate would not fall in the domain of the revenue. It is for the businessman to decide the same and the revenue cannot step into the shoes of the businessman in this regard. The test of commercial expediency is to be viewed from the point of view of businessman and not from the point of view of the revenue. Reliance in this regard is placed on the decision in the case of CIT vs Dhanrajgiri Raja Narasingirji [1973 (3) TMI 6 - SUPREME COURT] . Once it is proved and accepted that the lending is part of business activities of the assessee company and once there is no finding recorded by the lower authorities that the borrowed funds were diverted for non-business purposes, there cannot be any disallowance of interest u/s 36(1)(iii) of the Act on a proportionate basis. Accordingly, the ground no. 1 raised by the assessee is allowed. Disallowance of set off of business loss and unabsorbed depreciation against the total income of the assessee - claim disallowed by the AO on the ground that the details furnished by the assessee in the return of income under the relevant column differed with the details submitted during the course of assessment proceedings and the assessee failed to reconcile the same - CIT-A however found certain discrepancies in the claim made by the assessee and accordingly directed the AO to verify the amount of losses brought forward / carried forward and compute the correct amount of set off available and grant the same to the assessee as per law - HELD THAT:- There is nothing wrong in the direction of the CIT-A in asking the AO to verify the claim of brought forward business and depreciation losses from earlier years. The assessee cannot be aggrieved by this direction. Hence the order of the ld CIT-A in our considered opinion, does not call for any interference. Accordingly, the ground no. 2 raised by the assessee is dismissed.
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