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2014 (4) TMI 666 - ITAT MUMBAIDisallowance of interest expenses – Addition of estimated interest - Outstanding bank balance – Held that:- The excess balance shall automatically be transferred to a Fixed Deposit account, which will earn interest for the assessee - the assessee has effectively utilised the surplus funds - Since the Flexi Current account is a running account, the daily balances would change every day depending upon the deposits and collections - in order to put the bank balances for better use, the assessee seems to have opted for Flexi Current account and in that process, it has earned a sum of about Rs.5.00 lakhs as interest also - the AO’s view that the assessee has kept the funds idle is not based on any material but only on surmises and conjectures - the AO has computed notional interest on the outstanding bank balance as at the year end, which is not permissible under the Act – thus, the order of the CIT(A) set aside and the AO is directed to delete the addition – Decided in favour of Assessee. Disallowance made u/s 14A of the Act – Held that:- The AO has applied Rule 8D, which is not applicable to the year - the assessee has earned exempted income - some amount of disallowance is called for in terms of sec. 14A - Assesseee as well as revenue agreed that a sum of Rs.15,000/- may be disallowed – thus, the order fo the CIT(A) and the AO is directed to restrict the addition – Decided partly in favour of Assessee.
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