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| The Tax Publishers2019 TaxPub(DT) 1749 (Bang-Trib) INCOME TAX ACT, 1961
Section 36(1)(iii)
Where assessee had not furnished the copies of financial statements and had also failed to furnish a copy of ledger account to submit that there were business dealings, however, CIT(A) had given a finding that assessee did not possess interest-free funds equivalent to or in excess of the advance given, therefore, matter was remanded back to CIT(A) to decide afresh by providing one more opportunity to the assessee to substantiate its case
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Deduction under section 36(1)(iii) - Interest-free loan given to sister concern, whether out of commercial expediency - Allowability -
Assessee-company had given interest-free loan to its sister concern. AO disallowed proportionate interest on the said loan alleging that it was not given out of commercial expediency. Assessee contended that money was given to the above said company as advance for purchase of land and the loan was advanced out of commercial expediency, hence, no interest was charged Held: Assessee had not furnished the copies of financial statements and had also failed to furnishe a copy of ledger account to submit that there were business dealings between assessee and the said company. There was lack of clarity on the facts surrounding the issue. It claimed that it had not diverted any loan funds for giving advances and it had used only its rental income proceeds for giving the advances. However, CIT(A) had given a finding that assessee did not possess interest free funds equivalent to or in excess of the advance given. Therefore, matter was remanded back to CIT(A) to decide afresh by providing one more opportunity to assessee.
Followed:Addl. CIT v. M/s. Tulip Star Hotels Ltd. [Special Leave to Appeal (Civil)....../2012 (CC 7138-7140/2012, dt. 30-4-2012] : 2014 TaxPub(DT) 4813 (SC) and SA Builders Ltd. v. CIT (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 0833 (SC)
REFERRED :
FAVOUR : In assessee's favour by way of remand
A.Y. :
IN THE ITAT, BANGALORE BENCH
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