SHRI. MOOLCHAND KIRAN KUMAR JAIN,CHENNAI vs. DCIT, CENTRAL CIRCLE 1(4), CHENNAI

ITA 1417/CHNY/2023Status: DisposedITAT Chennai09 April 2024AY 2020-21Bench: SHRI V. DURGA RAO, HON’BLE (Judicial Member), SHRI MANJUNATHA. G, HON’BLE (Accountant Member)36 pages
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What did the Tribunal hold?

The Tribunal held that the assessee satisfied the conditions for claiming bad debt deduction under Section 36(1)(vii) read with Section 36(2) of the Act. The Tribunal reversed the CIT(A)'s findings on the disallowance of bad debts.

What were the facts?

The assessee advanced interest-free loans to group companies while borrowing funds and paying interest. The assessee also claimed a deduction for bad debts written off. The Assessing Officer disallowed proportionate interest and the bad debt claim, which was upheld by the CIT(A).

What were the issues?

Whether interest on borrowed funds advanced as interest-free loans to group companies is disallowable under Section 36(1)(iii), and whether the bad debt written off is eligible for deduction under Section 36(1)(vii) read with Section 36(2).

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 36(1)(vii),Section 36(2),Section 153A,Section 132

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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE

Hearing: 26.03.2024Pronounced: 09.04.2024

PER MANJUNATHA. G, ACCOUNTANT MEMBER:

These two appeals filed by the assessee are directed against common order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 31.10.2023 and pertains to assessment years 2020-21 & 2021-22. Since facts and identical and issues are common, for the sake of convenience, these appeals were heard together and are being disposed o

The order continues below.

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