RITURAJ STEEL PRIVATE LIMITED,BILASPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1), BILASPUR

ITA 697/RPR/2025Status: DisposedITAT Raipur09 February 2026AY 2017-18Bench: SHRI PARTHA SARATHI CHAUDHURY (Judicial Member), SHRI AVDHESH KUMAR MISHRA (Accountant Member)5 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication. It held that the CIT(A) failed to examine whether the advances were made out of non-interest bearing funds or if they were commercially expedient, which are crucial aspects for disallowance under Section 36(1)(iii).

What were the facts?

The assessee, Rituraj Steel Private Limited, filed its ITR declaring income of Rs. 87,42,930/-. During scrutiny, the AO disallowed Rs. 1,87,000/- as interest under Section 36(1)(iii) for interest-free advances given to sister concerns, arguing these were made from interest-bearing borrowed funds. The assessee contended the advances were from capital and interest-free funds.

What were the issues?

The key legal issue is whether the interest-free advances to sister concerns were made from interest-bearing borrowed funds or non-interest bearing funds, and if such advances were for commercial expediency, impacting the disallowance under Section 36(1)(iii).

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 250

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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI AVDHESH KUMAR MISHRA, AM

Hearing: 05/02/2026

Per Avdhesh Kumar Mishra, AM: This appeal for Assessment Year (‘AY’) 2017-18 filed by the assessee is directed against the order dated 29.10.2025 of the Additional Commissioner of Income Tax (Appeals), Mysore [‘Addl. CIT(A)’] passed under section 250 of the Income Tax Act, 1961 (‘Act’).

2.

The sole effective issue raised by the appellant

The order continues below.

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