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2019 (2) TMI 1866 - AT - Income TaxAddition u/s 36(l)(iii) on account of certain advances given - assessee had made investment by way of advance for purchase of plots/flats - HELD THAT:- Assessee has demonstrated availability of sufficient own funds by pointing out that while the interest free advances given the assessee had made profits during the year which was more than sufficient for making the impugned advances. These facts have remained uncontroverted before us - assessee has all along contended that the Cash Credit account from which advances were made contained mixed funds with interest free funds being deposited immediately before the impugned advances being made. CIT(A) has taken a microscopic view of the entire issue resting his findings only on the fact that CC account is an interest bearing account. The fact that sufficient own funds were available with the assessee and they were in fact used for making the advance established the user of interest free funds for making the impugned advances calling for no disallowance of interest. But we find that despite specific pleading made by the assessee in this regard the same was not addressed by the CIT(A). Fact of interest free funds from the current account of the assessee being used for making the impugned advances, by transferring them to the cash credit account before the giving of advance ,as shown by the Ld.Counsel for the assessee before us, needs verification and examination. We therefore consider it fit to restore the issue back to the CIT(A) to examine, verify and consider the contention of the assessee and thereafter to decide the issue in accordance with law. Ground of appeal No.2 therefore is allowed for statistical purposes. Disallowance u/s 14A - disallowance of expenses made u/s 14A purportedly incurred for the purpose of earning exempt income - HELD THAT:- Disallowance of interest expenses and administrative and other expenses incurred in relation to earning of exempt income u/s 14A read with Rule 8D(2)(ii) & 8D(2)(iii) of the Income Tax Rules,1962(in short referred to as “Rules”), respectively. No arguments have been made before us vis a vis disallowance of expenses made as per Rule 8D(2)(iii) of the Rules. The same is therefore upheld. As for the disallowance of interest as per Rule 8D(2)(ii), the arguments advanced by both the parties are identical to that advanced vis a vis disallowance of interest u/s 36(1)(iii) of the Act, with the assessee contending user of own funds for the purpose and the Revenue stating user of mixed funds. We have dealt with the arguments of both the parties at length at para 8-11 of our order above and our finding therein will apply to the present issue also.
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