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TMI Blog2023 (9) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... balance and during the year it was transferred to Chakresh Commosales Pvt. Ltd. We have also examined the copies of accounts in respect of loans advanced and find that these advances were given at the fag end of the year. After having perused the facts before us, we find that these loans were not given out of borrowed funds and therefore the addition made by the AO as well as its confirmation by the Ld. CIT(A) cannot be sustained. So accordingly we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly ground no. 2 is allowed. Disallowance u/s 40(a)(ia) - TDS were deducted at lesser rate on the interest - CIT(A) dismissed the appeal of the assessee by observing that the assessee has fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 2 is against the confirming the disallowance of Rs. 31,51,288/- by Ld. CIT(A) by invoking provisions of section 36(1)(iii) of the Act which was made by the AO on account of notional interest @12% on unsecured loans advanced free of interest. 4. Facts in brief are that the AO, on perusal of books of accounts and details filed by the assessee, observed that the assessee debited interest expenditure amounting to Rs. 42,33,309/- on unsecured loans of Rs. 44,30,73,060/- taken from various persons by the assessee. The AO also noted that the assessee has given loans amounting to Rs. 2,62,60,730/- to three persons without charging any interest. The AO further observed that the assessee has paid interest @ 12% on unsecured loans whereas no i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards notional interest. We have to consider several factors and establish that funds were paid out of interest bearing funds taken by the assessee. In the present case, we observe from the balance sheet of the assessee and various other documents filed that the assessee has not borrowed any fresh funds during the year rather loans were repaid during the year. We observe that at the end of year 31.03.2010, the secured loans and unsecured loan were Rs. 14,26,91,496/- whereas as on 31.03.2011 the aggregate loans were of Rs. 11,00,07,403/-. Similarly we observe that the money advanced by the assessee during the year was Rs. 2,62,60,730/- comprised of three parties out of whom Rs. 1,79,24,200/- is opening balance which was advanced/transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate of the auditor stating that the payee also offered same for taxation and also rejecting the contentions of the assessee that assessee has deducted tax at the lesser amount than provided under the Act whereas the disallowance can only be made where the assessee has failed to deduct tax at source. 10. After hearing the rival parties and perusing the material on record, we find that in this case the assessee has deducted tax at lesser rate and it is the case of short deduction of tax. Thus the reliance made by the assessee on the decision of Hon ble Delhi High Court in the case of Ansal Landmark Township Pvt. Ltd. in 377 ITR 365 (Del) is relevant. In our considered view, the disallowance cannot be made where the assessee has deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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