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Income Tax Appellate Tribunal, “SMC”, BENCH
Before: SHRI R.C.SHARMA
Assessee by Radha Halbe (Adv) Revenue by Shri R.K. Gubgotra (JCIT-DR) Date of Hearing 05/02/2020 Date of Pronouncement 06/02/2020 आदेश / O R D E R PER: R.C. SHARMA, A.M. This appeal by the assessee is directed against the order dated 13/12/2018 of ld. CIT(A)-28, Mumbai for the A.Y. 2015-16 in the matter of order passed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act).
In this appeal, the assessee is aggrieved for disallowance of interest U/s36(1)(iii) of the Act amounting to Rs. 2,56,570/-.
Rival contentions have been heard and record perused. From the record, I found that the A.O. has disallowed proportionate interest expenditure claimed in the P&L account on the plea that the assessee
M/s Red Rose Enterprise Vs ITO has diverted fund for non-business purposes. I also found that during the year under consideration, balance sheet of the assessee reflected loans and advances given to following parties from which no interest had been charged.
Sl. No. Name of the party Loan amount in Rs. 1. Chandrakala B Gandhi 4,10,000 2. Sahara Silk Industries 15,00,000 3. Devendra Associates 1,40,000 4. S.D. International 3,00,000 It was contention of the ld AR that the advances were given for the purpose of business. The contention of the ld. AR was as under:
We had given the loan/advance to the following parties for the following reasons:”
Sahara Silk- Advance given for fabrics to be delivered which was not as the approved cut and the amount of Rs. 15 lakhs is to be refunded; till date 11.95 lakhs have been refunded. Annexure 1 attached for the same.
Devendra Associates- Advance was given as a deposit towards an office which was cancelled and the said amount was refunded. Annexure 2 attached for the same.
S D International- Advance was given as an appointment of agent for transactions of a specific chemical tender with Overseas chemical/Dyes supplier which did not materialize and S D International was not able to get any suppliers. Hence the amount was refunded. Annexure-3e attached for the same.
M/s Red Rose Enterprise Vs ITO Chandrakala Gandhi- Advance given for onward booking and confirmation of a chemical tender which did not crystalise and hence the amount stands refundable. Annexure-4 attached for the same.
Our attention was invited to the letters filed by the respective parties indicating that the advances for business purposes, however, the ld DR has objected that these documents were not produced before the lower authorities, therefore, the same constitute additional evidence which cannot be accepted at the level of Tribunal. However, I found that these documents goes to the root of the issue, therefore, in the substantial interest of justice, I restore the matter back to the file of the A.O. for deciding afresh after considering all these evidences so filed by the assessee to the effect that the advances were given for the purpose of business. Needless to say, the assessee be given appropriate opportunity of hearing before deciding the issue.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 06th February, 2020.