TaxTMI 
TaxTMI 
2018 (4) TMI 702
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....he Act") dated 02.12.2011 for the Assessment Year 2009-10. 2. The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the disallowance of interest expenditure of Rs. 10,00,515/- in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee originally was a firm till 2004 and got converted into a limited company on 29.12.2004. Shri J.P. Agarwal, who was a partner in the erstwhile firm became a major shareholder in the assessee company. Shri J.P. Agarwal had a current account in the erstwhile firm which continued in the assessee company books and admittedly he had overdrawn the amounts from the assessee company. No interest was disallowed in the hands of the....
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....ad made advances to interested parties out of own funds. The assessee furnished the following details of interest paid during the assessment year 2009-10 before the ld. AO: The assessee filed the details of interest received before the ld. AO as under: The assessee stated that Shri J.P. Agarwal had given two properties belonging to him as collateral security to the company to enable the bank to grant credit facilities to the assessee company. Shri J.P. Agarwal in return was made available by the assessee company with interest free funds up to maximum limit of 1 crore at any given time as consideration for offering his properties as collateral security. Hence, it was pleaded that the sums advanced to Shri J.P. Agarwal by the assessee were ....
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....f request of Shri J.P. Agarwal, the assessee company was unable to release the properties from the mortgage. In such a situation, for retaining the benefit of loan availed from the bank, if decision was taken to give advance to Shri J.P. Agarwal, such decision was not to give gratuitous advance to its share holder but to protect the business interest of the assessee company. Accordingly, we hold that the excess borrowings made by Shri J.P. Agarwal from the assessee company was in the normal course of business and to retain the facility of loan availed from the bank, which clearly demonstrates the business nexus of the advances made by the company to Shri J.P. Agarwal. Hence, it cannot be said that the monies advanced to Shri J.P. Agarwal we....
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....stified in confirming the disallowance u/s 14A of the Act, in the facts and circumstances of the case. 6. The brief facts of this issue is that the assessee earned a dividend income of Rs. 6,001/- and claimed the same as exempt u/s 10(34) of the Act. The assessee stated that no expenditure was incurred for the purpose of earning such dividend income and accordingly, no disallowance u/s 14A of the Act need to be made thereon. The ld. AO resorted to compute the disallowance by applying the provisions of Rule 8D and made disallowance of Rs. 32,717/- under second and third limb of Rule 8D(2) of the Rules. This action of the ld. AO was upheld by the Ld. CIT(A). Aggrieved the assessee is in appeal before us on the following grounds: 2. On the ....