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2018 (6) TMI 1320 - AT - Income TaxDisallowance u/s 36(1)(iii) - Held that:- CIT(A) has held that out of ₹ 11.14 crores the loan given by the assessee out of overdraft account is only ₹ 2.61 crores which can be considered as sourced out of loan funds available in earlier years. The ld CIT(A) has held that out of ₹ 11.14 cores for advance given by the assessee a sum of ₹ 10.82 crores out of interest free funds. Further it was noted by the ld CIT(A) that in that year only car loans were borrowed by the assessee and those funds were used for buying the cars. In view of this, he stated that on ₹ 10.82 crores there is no interest expenditure attributable hence, he deleted the interest disallowance on the above sum. We do not find any reason to disturb the finding of the ld CIT(A) which is reasonable and logical. - decided against revenue Disallowance u/s 14A - Held that:- Substantial force in the argument of the ld AR that if there is no exempt income earned by the assessee then no disallowance can be made u/s 14A of the Act - above facts needs a proper examination that whether assessee has earned exempt income during the year or not. This fact is not available on record we have also verified only the documents available before us in the form of the balance sheet and profit and loss account. The copy of the computation was not placed before us. In view of this, we set aside this ground back to the file of the ld AO for proper verification that whether the assessee has earned any exempt income or not, if he finds that there is no exempt income earned by the assessee, disallowance deserves to be deleted Disallowance of interest on advance - held that:- In the present case, the CIT(A) has stated that interest on earlier loan was paid on car loans. However on examination of the balance sheet as at , for 31.03.2009 we find that the assessee has debited the financial expenses of ₹ 7.70 crores and where there was no disallowance was made u/s 36(1)(iii) on account of interest expenditure. Assessment order passed u/s 143(3) of the Act was placed before us, which confirmed above fact - we direct the ld AO to delete the interest expenditure on advance of ₹ 2.61 crores given to M/s. Saurya Promoters Pvt Ltd.
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