TMI Blog2022 (9) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... e were given to the suppliers with whom regular business transactions had been carried out, the advance to the DLF Ltd. given for the purpose of business and the other advances on which interest had been charged by the Assessee had been shown in the Schedule 17 forming part of the financial accounts. CIT (A) further noted that the loans and advances had been given on account of the Commercial Expediency and no notional interest could be charged on such advances given for the purposes of business. Addition u/s 14A read with Rule 8D - suo moto disallowance made by assessee - ITAT observed that the Appellant had own funds which were far more than the investments and the plain reading of Sections 14A(2) and 14A(3) showed that when the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the borrowed funds were not utilized for the purposes of the business of Assessee but diverted to Group Companies without charging any interest thereon. 3. He also states that the ITAT has erred in deleting the addition of Rs.37,40,940/- made under Section 14A read with Rule 8D of the Income Tax Rules, 1962 ignoring the fact that the Assessee admitted having incurred expenses for earning exempt income. 4. The CIT(A) on the issue of disallowance of interest expenditure of Rs.4,32,72,702/- made under Section 36(l)(iii) of the Act observed that the loans and advances included the investment in the immovable property and was part of the business activity, investment in the partnership firm was made wholly and exclusively for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T CA No. 6366 of 2003, the Hon'ble Apex Court observed that while examining the allowability of deduction, the Assessing Officer is to consider the genuineness of the business borrowings and that the borrowings was further purpose of business and genuine. Once, the genuineness is proved and interest is paid on the borrowings, no interest can be disallowed on the grounds that the assessee has not correctly used the amounts borrowed. Further, the Hon'ble Apex Court in the case of SA Builders held that in case of interest bearing loans taken and interest free advances given, what is to be looked into is the measure of commerdal expediency and for the purpose of the business . Hence keeping in view the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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