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2019 (11) TMI 926 - AT - Income TaxDisallowance of interest - CIT(A) restricted the disallowance proportionately to the exempt income as well as taxable income for which the unsecured loans were contributed as investment - AR submitted that the entire expenditure cannot not be allocated proportionately to the income earned on two different streams since, the income earned not only on account of capital contribution, but also on account of various services rendered by the firm therefore, requested to make the reasonable disallowance for capital contribution and also for other activities of earning the income - HELD THAT:- We have carefully considered the submissions of the Ld.AR and unable to convince with the argument of the Ld.AR, since, the share of profit is directly related to the capital contribution made by the assessee. For other services mentioned by the Ld.AR, the assessee is free to draw salary or remuneration as provided in the partnership deed. The Hon’ble Special Bench also confirmed the disallowance of expenditure in the ratio of income earned that is exempt and the taxable income. Therefore, we hold that the Ld.CIT(A) has fairly restricted the disallowance proportionately on the basis of income earned by the assessee with regard to exempt income as well as the taxable, thus, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided against assessee
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