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2016 (5) TMI 1218 - ITAT MUMBAIDisallowance u/s 36 (1) (iii) - interest on loan - Held that:- Assessee had advanced the loans during the normal course of business and therefore interest expenditure was allowable as per the provisions of section 36 (1) (iii)of the Act. The AO has not brought on record anything to prove that expenditure incurred under the head interest was not wholly and exclusively for carrying out the business of the assessee for the year under consideration. Therefore, confirming the order of the FAA, we dismiss the second ground, raised by the AO. - Decided in favour of assessee Disallowance made u/s. 14A - Held that:- In absence of any exempt income no disallowance could be made u/s. 14A of the Act. Considering the facts-like availability of sufficient own funds, non-receipt of exempt income during the year, and strategic investment in the sister concerns we hold that the FAA was not justified in upholding the disallowance. - Decided in favour of assessee Valuation loss treated as speculation loss - Held that:- We find that the assessee had shown interest income of ₹ 23. 78 crores. That in the MOA the main object of the company has been mentioned as financing. As per the settled principle of taxation jurisprudence section 73 is not applicable if the assessee is engaged in Finance business. Thus provisions of section 73 r. w. explanation was not applicable. Therefore reversing the order of the FAA, we decide the effective Ground of appeal in favour of the assessee.
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