The Tax Publishers2020 TaxPub(DT) 4604 (Del-Trib)

INCOME TAX ACT, 1961

Section 36(1)(iii)

Where CIT(A) had given a clear finding that certain sum was advanced interest-free as the said person was the son of founder member of company and besides that in the past assessment years also the same was allowed by the revenue, therefore, addition of interest at 12% could not be made.

Business deduction under section 36(1)(iii) - Interest attributable to advance made by assessee - Allowability -

Assessee was manufacturer of bicycles and bicycle parts, including steel tubes. AO made addition on the ground of interest attributable to advance made to a person. However, CIT(A) had deleted the said addition made by AO. Revenue argued that CIT(A) had not taken into cognizance of assessment order wherein AO had rightly disallowed the interest as interest attributable at 12% which was advanced to a person out of interest-bearing funds. Held: CIT(A) had given a clear finding that certain sum was advanced interest-free as the said person was the son of founder member of company and besides that in past assessment years also the same was allowed by the revenue. Therefore, addition was rightly disallowed by CIT(A).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15


INCOME TAX ACT, 1961

Section 37(1)

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