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2015 (4) TMI 674 - ITAT AHMEDABADDis-allowance of Interest expenses u/s.36(i)(iii)of the Income Tax Act,1961 - Direct nexus between borrowings and business purpose - Interest free advances given prior to taking such loans - Dis-allowance of reimbursement of expenses u/s 40(a)(ia), TDS not deducted - Held that:- Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar so following same reasoning, we are not inclined to interfere in the order of CIT(A) because interest bearing funds were held not to be diverted for non business use and accordingly disallowance in question was rightly deleted by CIT(A). For sake of consistency, we uphold the same. In respect to matter of disallowance of reimbursement of expenses, it was held that CIT(A) rightly observed that no TDS is required to be deducted in case reimbursement bills were separately raised. Assessee has made payment to C&F Agent and separate bills were raised in respect of reimbursement expenses incurred by Agent on behalf of assessee. The fact that separate bills wee issued for services and for reimbursement was not disputed in assessment order. As discussed above, in M/s. Om Satya Exim Private Ltd. [2011 (5) TMI 894 - ITAT AHMEDABAD]held that assessee was not liable to deduct TDS on reimbursement of expenses incurred by Agent on behalf of assessee. Disallowance in respect of these items has not been made u/s. 40(a)(ia). Nothing contrary was brought to our knowledge on behalf of revenue. Facts being similar so following same reasoning, CIT(A) was justified in deleting addition made by Assessing Officer on account of disallowance u/s. 40(a)(ia) of the Act. We uphold the same. - Decided against the revenue.
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