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2021 (8) TMI 424 - AT - Income TaxDisallowance u/s 14A r.w.r 8D or 37(1) - before the AO, it was submitted that this amount pertains to the interest cost utilized for granting ICDs to group companies and the interest earned thereof has been duly offered to tax as the business income - AO did not accept the contention of the assessee and held that the company failed to prove that the interest bearing fund was granted as loan to the group companies - HELD THAT:- The expenditure must be directly and intimately connected with business laid out by the assessee in his capacity as a trader. To be a permissible deduction, there must be a direct and intimate connection between the expenditure and the business. Ordinarily it is for the assessee to decide whether a certain expenditure should be incurred during the course of his business and if such expenditure has been incurred for promoting the assessee's business and earning profits, the assessee can claim a deduction of the expense under section 37(1) of the Act. Respectfully following the ratio of decision of the Apex Court in the case of CIT vs. Delhi Safe Deposit Co. Ltd. [1982 (1) TMI 2 - SUPREME COURT] thus hold that the interest expense has been incurred by appellant in respect of earning taxable income. Appeal of the revenue is dismissed.
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