UFX VENTURES PVT. LTD.,CHENNAI vs. ACIT, CORPORATE CIRCLE-3(2), CHENNAI

ITA 2272/CHNY/2025Status: DisposedITAT Chennai11 March 2026AY 2013-14Bench: SHRI GEORGE GEORGE K (Vice President), SHRI S.R. RAGHUNATHA (Accountant Member)1 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the difference between interest paid on borrowed funds and interest charged on advances to related parties is disallowable. Advances to directors and key managerial personnel without commercial expediency are also subject to disallowance.

What were the facts?

The assessee company claimed interest expenses on loans taken for business purposes. The Assessing Officer disallowed the entire interest expenditure, suspecting diversion of funds to related parties. The CIT(A) partly confirmed the disallowance.

What were the issues?

Whether interest expenditure on borrowed funds is allowable when funds are advanced to related parties, and whether advances to directors/key managerial personnel were for business purposes.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 09.03.2026Pronounced: 11.03.2026

PER S.R. RAGHUNATHA, AM:

These appeals filed by the assessee are directed against two

orders of Commissioner of Income Tax (Appeals), National Faceless

Appeal Centre (NFAC), Delhi, both dated 07.04.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2013-14 & 2014-15. :- 2 -: ITA Nos.2272 & 2273/CHNY/2025

2.

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The order continues below.

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