INCOME TAX OFFICER, MORIGAON vs. PROGRESSIVE FERTICHEM PRIVATE LIMITED, JAGIROAD

Facts

The revenue filed an appeal against the order of the CIT(A) for AY 2017-2018. The primary issue involved the disallowance of interest on loans granted by directors, which the AO treated as manipulation for higher profits and claimed deduction u/s 80IA. The CIT(A) deleted this addition. Other issues involved VAT remission and interest on fixed deposits.

Held

The Tribunal noted that there is no bar on directors providing interest-free or lower-interest loans. The loans were not claimed as bogus or for non-business purposes. The CIT(A)'s order on VAT remission was based on a prior decision, and the fixed deposits were held to be for business purposes. Thus, no interference was found necessary in the CIT(A)'s orders.

Key Issues

Whether the disallowance of interest on director's loans and the treatment of VAT remission and interest on fixed deposits for eligible business deductions were justified.