INCOME TAX OFFICER, WARD-2(1), HYDERABAD vs. KLR INDUSTRIES LIMITED, HYDERABAD

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ITA 1155/HYD/2017Status: DisposedITAT Hyderabad05 April 2018AY 2012-132 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the CIT(A) had restored the matter to the AO for reconsideration and examination of facts, there was no grievance for the Revenue. Therefore, the appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue appealed against the CIT(A)'s order which deleted the disallowance of interest on interest-free advances given to a sister concern. The CIT(A) had restored the matter to the AO for fresh consideration.

What were the issues?

Whether the CIT(A) was correct in restoring the issue of disallowance of interest on interest-free advances to the AO for fresh examination, and whether the Revenue had grounds to appeal this decision.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Smt. P. Madhavi Devi & Shri B. Ramakotaiah

Hearing: 05.04.2018Pronounced: 05.04.2018

Per Smt. P. Madhavi Devi, J.M.

Both are Revenue’s appeals for the A.Ys 2012-13 & 2013-14 respectively against the common and consolidated order of the CIT (A)-9, Hyderabad, dated 27.02.2017.

2.

In both the appeals, except for the quantum, grounds of appeals raised by the Revenue are the same i.e. against the deletion by the CIT (A) of the disallowance of interest on interest free advances given by the AO to its sister concern made by the AO u/s 36(1)(iii) of the Act.

3.

On going through the order of the CIT (A), we find that the CIT (A) observed as under: “4.1. Disallowance of interest u/s 36(1)(iii)………………

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ITA Nos 1155 and 1156 of 2017 KLR Industries Ltd Hyderabad.

I have considered the arguments of the assessee and have gone through the Hon'ble ITAT decision relied upon by the assessee in its own case. In view of the Hon'ble ITAT decision and in view of the assessment order passed by the ITO Ward-2(1) for A.Y 2007-08 in consequence of ITAT order, I hold that the matter needs fresh consideration by the AO for this year also. On verification of balance sheet it is seen that even during year under consideration the reserves and surplus are more than the amounts given to sister concern. However, as this aspect is not verified by the AO, the matter is restored to the file of the AO for reconsideration and examination of the facts and decision accordingly keeping in view the Hon'ble ITAT directions. If the reserves and surplus are more than the loans given, natural presumption would be that the amounts are given out of reserves and surplus and no proportionate disallowance of interest would be made. Therefore, the matter is restored to the file of the AO for reconsideration of the disallowance of interest accordingly. In the result, the grounds related to this addition are treated as partly allowed”.

4.

As seen from the above, the CIT (A) has not granted relief to the assessee but has restored the matter to the file of the AO for reconsideration and examination of the facts. Therefore, there can be no grievance to the Revenue. Therefore, the appeals of the Revenue are dismissed. Order pronounced in the Open Court on 5th April, 2018.

Sd/- Sd/- (B. Ramakotaiah) (P. Madhavi Devi) Accountant Member Judicial Member Hyderabad, dated 5th April 2018. Vinodan/sps Copy to: 1 ITO Ward 2(1), 5th Floor, Room No.506, Signature Towers, Opp: Botanical Gardens, Kondapur, Hyderabad 500084 2 KLR Industries Ltd, Survey No.221/1, Cherlapally Road, ECIL Hyderabad 500062 3 CIT (A)-9 Hyderabad 4 Pr. CIT – 2 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File

By Order

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