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2021 (10) TMI 65 - ITAT DELHIAllowable business expenditure v/s personal use out of expenditure - Disallowance towards alleged personal use out of expenditure on festival and gifts - HELD THAT:- We find merit in the contentions of the Ld. Counsel for the assessee that the addition has been made purely on adhoc basis. The Assessing Officer has not pointed out any specific item related to the personal uses. Therefore, the addition made by the Assessing Officer and sustained by Ld.CIT(A) is not justified hence, deleted. TDS u/s 195 - Disallowance of legal and professional expenses by invoking section 40(a)(i) - Scope of amendment - HELD THAT:- We do not see any justification to sustain the addition as made by the Assessing Officer. Ld.CIT(A) has categorically stated that the retrospective amendment has been clarified that even if non-resident has no business communication to India and not rendered any services in India then also the payment received deem to accrue or arise in India. As decided in MIRA EXIM LTD. [2018 (1) TMI 739 - DELHI HIGH COURT] as amounts paid were not Fee for Technical Services (FTS) under Explanation 7 to section 9(2),the deduction under section 40(a)(ia) was not warranted - Decided in favour of assessee. Disallowance of interest paid on account of notional interest on interest free advances given to the related party against the purchase of guest house property - HELD THAT:- The issue is identical to the issue involved in the earlier year. The matter travelled to Hon’ble High Court. Hon’ble High Court has confirmed the deletion made by the Tribunal [2018 (1) TMI 739 - DELHI HIGH COURT] disallowance under section 36(1)(iii) is concerned, the addition was made purely on the basis that the funds were borrowed by a Director and that interest needed to be charged. This was wholly erroneous premise because the amounts were given to the Director for purely business purpose of the entity, i.e. to acquire guest house. The proposal did not materialize and eventually the money was returned. It is not Revenue’s case that the amounts were utilized by the Director for her own purpose - finding with respect to commercial expediency, in the circumstances, does not call for interference - Decided against revenue. Addition invoking the provision of section 40A(3) - assessee submitted that Ld.CIT(A) was not justified in directing the Assessing Officer to invoke the provisions of Rule 6DD of the Income Tax Rules, 1962 - grievance of the assessee that Ld.CIT(A) gave direction for enhancement without complying the provision of section 251(2) - HELD THAT:- We find that Ld.CIT(A) did not comply with the provision of section 251(2) of the Act. Therefore, the direction of Ld.CIT(A) is hereby, quashed being illegal.
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