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2023 (9) TMI 882 - AT - Income TaxDisallowance by invoking provisions of section 36(1)(iii) - notional interest @12% on unsecured loans advanced free of interest - HELD THAT:- As observe that the money advanced by the assessee during the year was Rs. 2,62,60,730/- comprised of three parties out of whom Rs. 1,79,24,200/- is opening balance which was advanced/transferred from Tulsi Damodaran to Chakresh Commoscals Pvt Ltd as is apparent from the schedule no. 5 annexed to balance sheet titled “Current Assets, Loans & Advances”. We observe that Rs. 1,72,24,200 represented opening balance and during the year it was transferred to Chakresh Commosales Pvt. Ltd. We have also examined the copies of accounts in respect of loans advanced and find that these advances were given at the fag end of the year. After having perused the facts before us, we find that these loans were not given out of borrowed funds and therefore the addition made by the AO as well as its confirmation by the Ld. CIT(A) cannot be sustained. So accordingly we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly ground no. 2 is allowed. Disallowance u/s 40(a)(ia) - TDS were deducted at lesser rate on the interest - CIT(A) dismissed the appeal of the assessee by observing that the assessee has failed to give a certificate of the auditor stating that the payee also offered same for taxation and also rejecting the contentions of the assessee that assessee has deducted tax at the lesser amount than provided under the Act whereas the disallowance can only be made where the assessee has failed to deduct tax at source - HELD THAT:- After hearing the rival parties and perusing the material on record, we find that in this case the assessee has deducted tax at lesser rate and it is the case of short deduction of tax. Thus the reliance made by the assessee on the decision of Ansal Landmark Township Pvt. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] is relevant - disallowance cannot be made where the assessee has deducted tax at a rate which is lesser than what is provided under the Act. Accordingly we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Assessee appeal allowed.
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