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Facts
The assessee, New Star System Solutions Pvt. Ltd., appealed for Assessment Year 2017-18 against the CIT(A)'s order which confirmed an interest expenditure disallowance of Rs. 74,406/- under section 36(1)(iii) of the Income Tax Act. This disallowance was made due to the alleged diversion of interest-bearing funds for non-business purposes. The assessee did not appear for the tribunal hearing, leading to an ex-parte proceeding.
Held
The Tribunal observed that both lower authorities had consistently made the disallowance and the assessee failed to rebut this finding throughout the assessment and appellate stages. Finding no merit in the assessee's substantive ground due to lack of rebuttal, the Tribunal upheld the disallowance.
Key Issues
Whether the disallowance of interest expenditure under section 36(1)(iii) for the alleged diversion of interest-bearing funds for non-business purposes was justified when the assessee failed to provide a rebuttal.
Sections Cited
143(3), 36(1)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
O R D E R
This assessee’s appeal for Assessment Year 2017-18, arises against the order of CIT(A)/NFAC, Jaipur dated 28.05.2024 in case No. ITBA/APL/S/250/2024-25/1065179519(1), in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”).
Case called twice. None appears at the assessee’s behest. It is accordingly proceed ex-parte.
It emerges during the course of hearing with the able assistance coming from the Revenue side that both the learned lower authorities have made section 36(1)(iii) interest expenditure disallowance of Rs. 74,406/- alleging diversion of interest bearing funds for non-business purposes. 4. Faced with the situation, Mr. Bansal invites the tribunal’s attention to assessment discussion at page 2 in para 4 wherein the impugned disallowance represents the difference between suo motu disallowance and that liable to be rejected u/s 36(1)(iii) of the Act; to the tune of Rs.74,406/- herein. The assessee has failed to rebut Page | 1 New Star System Solutions Pvt. Ltd this clinching finding during assessment as well as in the lower appellate proceedings. I, accordingly, do not find any merit in it’s sole substantive ground. The same fails accordingly. 5. This assessee’s appeal is dismissed. Order pronounced in the open court on 24/12/2024.