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2023 (9) TMI 375 - AT - Income TaxDisallowance of interest u/s. 36(1)(iii) - advance given by the assessee to SIL and the assessee holding substantial amount of the shareholding in that company - company to whom the money is advance in BIFR - HELD THAT:- There is no discussion in the order of the lower authority that the assessee till 31.03.2000 regular in charging the interest and has stopped because of the fact that the recovery of further interest becomes doubtful from 01.04.2000 on account of the fact that the company SIL become sick and therefore, we see no reason not to consider the plea of the assessee that when the interest is not received no disallowance can be made. Even the ld. AO through ld. DR at the time of hearing also did not controvert the fact the assessee is having sufficient balance which is interest free as on 31.03.2044 at Rs. 3,25,70,408/- as against the SIL debit balance of Rs. 1,22,45,671.90 and in fact that the assessee earlier charging interest and has stopped on account of the reason that the company becomes Sick and even the recovery of the principle amount in doubt how revenue can tax disallow the claim of interest to the extent of the advance of SIL as notional interest and that too on historic advance given in earlier years. As the advance given by the assessee to SIL which was for business purpose and the assessee holding substantial amount of the share holding in that company the disallowance of interest considering the direction of the bench that the assessee is having sufficient fund which are interest free and therefore, we vacate the disallowance - Ground raised by the assessee is allowed.
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