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2022 (12) TMI 219 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - assessee advanced interest free loan to director / relativeswhereas the assessee borrowed funds and debited interest at less amount - HELD THAT:- No commercial expediency of advancing loan could be established by the assessee. Accordingly, Ld. AO computed proportionate interest disallowance u/s 36(1)(iii) for Rs.40.47 Lacs. The Ld. CIT(A) confirmed the same. Aggrieved, the assessee is in further appeal before us. The limited argument of Ld. AR is that own interest free funds far exceed the interest free advances granted by the assessee and therefore, it would be presumed that the loans were advanced out of own funds. Concurring with the same, we remit this matter back to the file of Ld. AO for fresh adjudication in the light of aforesaid argument. The assessee is directed to substantiate its claim. This ground stand allowed for statistical purposes. The appeal of the assessee for AY 2015-16 stands partly allowed. Addition made u/s 2(22)(e) - assessee received interest free advances entities who had common shareholders - HELD THAT:- We find that the fact that the assessee is not a shareholder in the two entities, remain undisturbed before us and therefore, no such addition could have been made in the hands of the assessee as per the cited decision of Hon’ble Supreme Court Madhur Housing & Development Co [2017 (10) TMI 1279 - SUPREME COURT]. Therefore, no fault could be found in the impugned order. The appeal stands dismissed.
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