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2018 (12) TMI 902 - AT - Income TaxDisallowance u/s 36(l)(iii) - assessee has given interest free advances to its sister concern which is for non business purposes - proof of Commercial expediency - Held that:- Commercial expediency of the said advance had been adequately established by the assessee. The facts relating to the impugned transaction have not been controverted by the Revenue. That Shivaks Impex Ltd. was a step down subsidiary of the assessee company, has not been disputed by the Revenue. The fact that the assessee, its subsidiary and Shivaks Impex Ltd. were all in the same line of business has also not been disputed by the Revenue. It is also not disputed that the advance made has been utilized for the purpose of making purchases. It is evident that had the said advance not been made it would have seriously affected the business of Shivaks Impex Ltd., which in turn would have affected the assessee also since the value of its investment in its subsidiary would have been affected on account of the poor results shown by Shivaks Impex Ltd. - no disallowance u/s 36(1)(iii) could have been made on account of the availability of sufficient own funds and on account of the advances having been made for business purpose ,no disallowance of interest pertaining to funds utilized for making the same was warranted - decided in favour of assessee. Disallowance u/s 14A - CIT(A) deleted the disallowance made on finding that no exempt income had been earned by the assessee from the impugned investments made - Held that:- Rule 8D cannot be read in a manner, which takes it beyond the scope and content of the main provision, which is, Section 14 A of the Act. The is clearly relatable to the earning of actual income and not notional or anticipated income. The submission of the Department to the effect that s.14A would be attracted even to exempt income 'includable' in total income would entail the assessment of notional income, assumed to be exempt in the future, in the present assessment year. The computation of total income in terms of s.5 of the Act is on real income and there is no sanction in law for the assessment of admittedly notional income, particularly in the context of effecting a disallowance in connection therewith. - decided in favour of assessee.
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