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2023 (1) TMI 163 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - expenses incurred for earning exempted income - HELD THAT:- CIT(A) has himself observed that the A.O. is justified in disallowing the expenses and despite such observation, in the later part he has deleted the disallowance - Thus, it is manifest that the Ld. CIT(A) has made a drafting mistake in the order and mistakenly deleted the disallowance, though the preceding observations made by him clearly demonstrate that he was of the view that the disallowance was required in the situation and that he agreed with the disallowance made by Ld. AO. Being so, we hardly need to mention anything further, suffice it to say that we too agree that the impugned expenses are incurred for normal functioning of the company and therefore incurred for entire business consisting of agricultural as well as nonagricultural activities. Therefore, the Ld. AO is quite justified in making 40% disallowance while framing assessment. Upholding the same, we dismiss the Ground No. 1. Unexplained income u/s 68 - bogus cash credit - HELD THAT:- There is a mis-match in the financial figures of RCSPL, which is the main basis to accept / reject the creditworthiness of RCSPL. Therefore, it is necessary to re-verify these material discrepancies in the orders of lower authorities. At this stage, finding no assistance from assessee, we are unable to rule out these discrepancies and ascertain the correct position. Therefore, in such circumstance, we are inclined to remit this ground to the file of Ld. CIT(A) who will take a call on these aspects and pass a reasoned order to settle the grievance of assessee involved in this ground. Needless to mention that the assessee shall be entitled to place before Ld. CIT(A) all evidences as may be in his possession for a proper adjudication of the issue involved in this ground. Thus, the Ground No. 2 is remanded back to Ld. CIT(A). Addition u/s 36(1) - disallowance of interest expenditure - HELD THAT:- We note that the Ld. AO has given adequate findings for making this disallowance. On the other hand, the Ld. CIT(A) has given very summary and cryptic order and given relief to the assessee. A bare reading to the paragraph of Ld. CIT(A) indicates that he has stated “It is accepted principle that if there is interest free fund available to the appellant sufficient to meet its investment and at the same time the appellant raised the loan, it can be presumed that the investment is from the interest free fund available.” Thus, the Ld. CIT(A) has proceeded on presumption basis, whereas the Ld. AO has given concrete findings in his order. In this scenario, we are in agreement with the Ld. DR that the disallowance ought to be upheld. We therefore reverse the action of Ld. CIT(A) and uphold the disallowance. Thus, the Ground No. 3 is hereby dismissed.
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