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2021 (7) TMI 710 - AT - Income TaxDisallowance of interest expenses by treating the same as prior period expenses - CIT(Appeals) by holding that the said interest expenses are not allowable as deduction even u/s 36(1)(iii) - HELD THAT:- We find no merit in the contention of the assessee that the interest-free advance given by the assessee-company to M/s. NRC Limited was for the purpose of its business. We, however, find merit in the alternative contention raised by the assessee that only part amount of fund borrowed from M/s. ISG Traders Limited having been advanced to M/s. NRC Limited interest-free, the ld. CIT(Appeals) was not justified in disallowing the entire interest expenses under section 36(1)(iii) and the said disallowance should be restricted to be interest expenses attributable to the interest-free advance given by the assessee-company to M/s. NRC Limited during period 01.04.2010 to 31.03.2011. We accordingly direct the Assessing officer to compute the interest expenses attributable to the interest-free advance given by the assessee to M/s. NRC Limited and restrict the disallowance to that extent. Ground No. 1 of the assessee's appeal is accordingly partly allowed. Disallowance on account of interest expenses under section 36(1)(iii) - HELD THAT:- Following the said conclusion drawn while deciding the issue involved in Ground No. 1, we uphold the impugned order of the ld. CIT(Appeals) confirming the disallowance made by the Assessing Officer on account of interest expenses to the extent the same was attributable to the interest-free advance given by the assessee-company to M/s. NRC Limited. Ground No. 2 of the assessee's appeal is accordingly dismissed.
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