DCIT 5(2)(1), MUMBAI vs. NEELKAMAL REALTORS & ERECTORS (I) P.LTD, MUMBAI

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ITA 2128/MUM/2017Status: DisposedITAT Mumbai30 August 2019AY 2012-138 pages
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What did the Tribunal hold?

The Tribunal held that the disallowance was arbitrary and bad in law as the revenue had consistently allowed the interest expenditure in prior and subsequent assessment years without any change in facts. The Tribunal relied on the principle of consistency as laid down by the High Courts.

What were the facts?

The assessee claimed interest expenditure on a bank loan, which was utilized for project completion. Subsequently, interest-free loans were advanced to related parties from sale proceeds. The Assessing Officer disallowed the interest expenditure, but the CIT(A) partly allowed the assessee's appeal, confirming the disallowance.

What were the issues?

Whether interest expenditure is disallowable when interest-free loans are advanced to related parties, and if the principle of consistency applies when the revenue has allowed such expenditure in previous years.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: SHRI SHAMIM YAHYA (AM) & SHRI RAM LAL NEGI (JM)

For Appellant: Ms. Aarti Vissanji (AR), Shri Chaitnya Anjaria/Sh. Saravanan
Hearing: 30/08/2019Pronounced: 30/08/2019

आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant

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