ARJUNA COTTON INDUSTRIES,AKOLA vs. JCIT,AKOLA,RANGE,AKOLA, AKOLA

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ITA 324/NAG/2017Status: DisposedITAT Nagpur08 December 2022AY 2009-104 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the disallowance of interest under Section 36(1)(iii) as the funds were diverted for non-business purposes. The argument of double taxation was rejected as the disallowance was upheld in principle.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming an addition of Rs. 3,15,232/- made by the AO on account of interest on advances given to a sister concern. The assessee argued that this amount was offered as income in the subsequent year, leading to double taxation.

What were the issues?

Whether interest on advances given to a sister concern is disallowable when funds are diverted for non-business purposes. Whether taxing the same income in two assessment years constitutes double taxation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT

Before: SHRI S.S. GODARA & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Mukesh Agarwal
For Respondent: Shri G.J. Ninawe

आदेश / ORDER

PER S.S. GODARA, JM:

1.

This assessee’s appeal for AY 2009-10 arises against the CIT(A)-1, Nagpur’s order dated 22-05-2017 passed in case No. CIT(A)- 1/341/2011-12 involving proceedings under Section 143(3) of the Income Tax Act, 1961, in short ‘the Act’.

Heard both the parties. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal : “1. That on the facts and in the circumstances of the case the learned CIT Appeal has erred in confirming addition of Rs.3,15,232/- made by the ld. AO on account of interest on advances given to sister concern which was received and accounted for as income in the next year. The addition is unjustified, arbitrary and deserved to be deleted.

2.

That the addition of Rs.3,15,232/- in the relevant AY tantamount to taxation of same income twice since this amount is also taxed in next year, i.e. AY 2010-11 on receipt basis. The double taxation of same income is not permissible under the law.”

3.

Learned counsel’s submits during the course of hearing that he does not challenge correctness of the impugned section 36(1)(iii) interest disallowance of Rs.3,15,232/- in principle. The same stands upheld therefore.

4.

Learned counsel next submitted that the assessee had already offered its interest receipts in the subsequent assessment year 2010-11 and therefore, this addition does not deserve to be sustained since amounting to double disallowance. We find no merit in the assesee’s instant arguments once the impugned disallowance of interest itself u/s.36(1)(iii) stand upheld in principle wherein it stands concluded that this taxpayer had diverted its interest bearing funds for non-business purposes. We, therefore, decline the assessee’s latter substantive ground as well. It is made clear that the learned Assessing Officer’s consequential assessment may consider credit of the assessee’s taxes paid in the assessment year 2010-11, if available as per law. Ordered accordingly.

5.

No other ground or argument has been raised before us.

6.

This assessee’s appeal is dismissed in above terms.

Order pronounced in the open Court on 09th December, 2022.

Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; �दनांक Dated : 09th December, 2022 Satish

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to:

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