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2021 (6) TMI 303 - AT - Income TaxDisallowance of interest u/s. 36(1)(iii) - amount advanced which was computed @15% on the monthly balances - year of assessment for advances and borrowings - HELD THAT:- As outstanding debit entries do not pertain to the assessment year under consideration and the assessee had sufficient interest free capital to meet these advances during the years when these advances were made. The authorities below have neither given any cogent reasons for rejecting the contention of the assessee based on the audited books of account nor brought on record any evidence to rebut the contention of the assessee. There is no evidence on record to arrive at the conclusion that the advances in question were made during the year relevant to the assessment year under consideration and the assessee had utilized the interest-bearing funds for giving interest free loans to the above five parties. Hence, we find merit in the arguments of the Ld. Counsel for the assessee that the impugned order is not sustainable in law. Further, we are of the considered view that the impugned order is contrary to the evidence on record and also against the settled principles of law. Accordingly, we set aside the impugned order passed by the Ld. CIT(A) and direct the AO to delete the addition made on account of disallowance u/s. 36(1)(iii) - Decided in favour of assessee.
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