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TMI Blog2022 (9) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... the total interest of Rs.19,13,058/- claimed in the profit on loss account) ignoring the submissions and evidences placed on record. Thus the addition so made should be deleted. 2. The CIT(A) erred in law and on facts in confirming the disallowance of funeral expenses of Rs.4,000/- incurred to maintain clients relationship as per policy of the assessee. Thus the expenses incurred for business expediency should be deleted." 3. Brief facts of the case are that assessee society is involved in micro finance activities. In the assessment order passed u/s 143 (3) of the Income-tax Act, 1961 (for short 'the Act'), AO made following additions:- Add : 1. Unexplained cash credits u/s 68 Rs.65,00,000/- (as discussed above) 2. Disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of interest paid under the head 'Micro Finance Activity'. It is seen that the' appellant is paying interest on a higher rate i.e. 11 to 13% on loan taken comparing to the interest received on FDRs which is just 6% p.a. The perusal of the-balance sheet reveals that the FDRs and Cash & Bank balances available with the appellant at the end of the period under consideration was Rs.42,12,119/-. It is, apparent that although the appellant is having spare funds lying idle in the form of cash at bank, and FDRs fresh loans were taken during the year ranging interest @ 11 to 14% p.a. Despite of funds available the term loans were taken against the FDRs paying interest ranging 12.5%. to 14%. Hence, there is no justification in borrowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has sufficient funds and it has not been diverted for activities which could not earn interest, disallowance cannot be made on the ground of prudence which should have been done in the opinion of the Revenue authorities. Hence, we are of the considered opinion that the order of ld. CIT (A) is not sustainable and accordingly we set aside the same on this issue. 8. As regards issue of Rs.4,000/- incurred for funeral expenses, assessee's claim was that the same was related for business inasmuch as expenditure represents payment mad to microfinance clients on the death of their family members. It was held by the Revenue authorities to be not related to the business of the assessee. In our considered opinion on the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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