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2022 (4) TMI 620 - AT - Income TaxAddition u/s 36(1)(iii) - Interest on business advances - whether assessee has given utilisation of loan for business purpose and also has shown interest free loan and advances to related entities? - HELD THAT:- These advances were business advances and is covered under commercial expediency; and secondly, if the assessee had huge interest free funds which far exceeds the advances given, therefore, no deduction u/s 36(1)(iii) can be made. Here, in this case, on both the count, we hold that no disallowance can be made as these loans and advances were purely business advances which are not being rebutted by the AO except for making the disallowance on conjectures and hypothesis and what the businessman do first; and secondly, if assessee had surplus interest free funds then it can be presumed that the borrowed funds which have been utilized for some other business purpose, proportionate disallowance could be made. Accordingly, this ground raised by the Revenue is dismissed. Disallowance u/s 14A is concerned it is an admitted fact that in AY 2014-15, no exempt income has been accrued to the assessee, therefore, no disallowance u/s 14A can be made. It is an admitted fact that here, the assessee has received exempt dividend income of ₹ 6,31,308/-, out of which the assessee had made suo moto disallowance of ₹ 5,45,245/-. Ld. CIT (A) restricted the disallowance to the extent of exempt income, therefore, we do not find any reason to interfere in such a finding in the light of the judgment of Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] and Cheminvest Ltd.[2015 (9) TMI 238 - DELHI HIGH COURT] therefore, this ground is dismissed.
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