2021 (2) TMI 63

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....cruxes of the issues are that: - (i) The Ld. CIT (A) has erred in upholding the order of the Ld. AO who had made an addition of Rs. 15,61,749/- towards proportionate interest on interest free advances extended U/s. 36(1)(iii) of the Act. (ii) The Ld. CIT (A) has erred in upholding the order of the Ld. AO who had made an addition of Rs. 2,73,183/- being the disallowance of interest paid on late payment of TDS Rs. 1,19,167/- and the penalty levied thereon amounting to Rs. 1,54,016/- invoking the provisions of section 37(1) of the Act. 3. The brief facts of the case are that the assessee is a Private Limited Company engaged in the business of manufacturing and selling the products of Bread Stalk, filed its return of income....

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....d. AR submitted before us that the assessee had own funds in the form of capital and reserves which is more than the amount advanced to its sister concerns as interest free loans. The Ld. AR further submitted that, since the own fund of the assessee was non-interest-bearing, addition cannot be made invoking the provisions of section 36(1)(iii) of the Act for extending interest free loans from such fund to its sister concerns. It was therefore pleaded that the addition made may be deleted. The Ld. DR on the other hand vehemently argued in support of the orders of the Ld. Revenue Authorities and prayed for confirming the same. 7. We have heard the rival submissions and carefully perused the materials on record. On perusing the balance shee....

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....nalty paid by the assessee towards late payment of TDS aggregating to Rs. 2,73,183/- by invoking the provisions of section 37(1) of the Act. Provisions of section 37(1) of the Act is reproduced herein below for reference: - "Section 37(1):- Any expenditure (not being expenditure of the nature described in section 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". [(Explanation-1)] - For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee....