ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA, KOTA vs. CHAMBAL FERTILIZERS AND CHEMICALS LTD., KOTA

ITA 1097/JPR/2024Status: DisposedITAT Jaipur27 August 2025AY 2011-12Bench: SHRI GAGAN GOYAL (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)1 pages
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What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s findings on interest disallowance and remitted the matter back to the Assessing Officer to determine the availability of interest-free funds. Regarding the valuation of shares and capital loss, the Tribunal also remanded the issue to the Assessing Officer for fresh determination.

What were the facts?

The assessee company made investments in its subsidiary companies. The Assessing Officer disallowed interest on borrowed funds used for these investments under Section 36(1)(iii). The CIT(A) initially remanded the matter, and later allowed the assessee's appeal, deleting the disallowance. The department appealed this deletion.

What were the issues?

Whether interest on borrowed funds used for investment in subsidiaries is disallowable. Whether extinguishment of rights in a subsidiary company constitutes a transfer and results in a capital loss.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 14A,Section 2(47),Section 45

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR

Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1090, 1097 to 1099 & 1091/JPR/2024

Hearing: 27/08/2025Pronounced: 27/08/2025

PER: NARINDER KUMAR, JUDICIAL MEMBER .

All the above captioned five appeals are interconnected and are being taken up together for disposal, as common issues, arising out of similar facts are involved, and Ld. DRs for the department-appellant and Learned counsel for the assessee have argued all

The order continues below.

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