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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the
Assessee against the order of the Commissioner of Income Tax
(Appeals), Gandhinagar (‘CIT(A)’ in short), dated 03.05.2017
arising in the assessment order dated 01.11.2016 passed by the
ITA No. 1606/Ahd/17 [Sardar Dairy Ltd. vs. ITO] A.Y. 2014-15 - 2 -
Assessing Officer (AO) under s. 143(3) of the Income Tax Act,
1961 (the Act) concerning AY 2014-15.
The solitary issue in the captioned appeal is disallowance of
interest amount to Rs.3,35,976/- under S. 36(1)(iii) of the Act on
account of interest free advances of Rs.33,33,105/- lent by the
assessee.
With the assistance of the learned AR for the assessee, we
have gone through the record carefully. It emerges from the
record that the assessee has given advance of Rs.33.33 Lakhs
without charging any interest. The learned AO has calculated
notional interest on such interest free advance and disallowed
interest expenditure to the extent of Rs.3,35,976/-. An identical
disallowance was made in AY 2012-13 and AY 2013-14.
However, on appeal to the Tribunal, the disallowance was deleted
on the ground that the assessee was having its own interest free
capital far in excess of the corresponding advances in question.
The issue having been adjudicated in favour of the assessee on
these facts in the earlier assessment years (refer ITA
No.3082/Ahd/2016 AY 2013-14), which in turn, is in conformity
with the long line of judicial precedent, we do not see any reason
ITA No. 1606/Ahd/17 [Sardar Dairy Ltd. vs. ITO] A.Y. 2014-15 - 3 -
to depart from the aforesaid view. The order of the CIT(A) thus
requires to be set aside and the AO is directed to delete the
disallowance on this score.
In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 31/01/2019
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 31/01/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।