RATNAM JUTE PVT LTD,RAJAM vs. INCOME TAX OFFICER, WARD-3, SRIKAKULAM

Q: Which sections of the Income-tax Act were involved?

Section 143(1), Section 40(1)(ia)

ITA 212/VIZ/2023Status: DisposedITAT Visakhapatnam29 August 2023AY 2014-15Bench: SHRI DUVVURU RL REDDY, HON’BLE (Judicial Member), SHRI S BALAKRISHNAN, HON’BLE (Accountant Member)8 pages

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the revenue failed to establish a nexus between the interest-bearing funds and the interest-free advances. Following its own previous decisions and that of other benches, the Tribunal found that the loan funds were not utilized for the interest-free advances.

What were the facts?

The assessee company advanced a significant sum to three individuals without charging interest, while it had borrowed funds on which it paid interest. The Assessing Officer disallowed the interest expenditure claimed by the assessee, arguing a lack of nexus between the borrowed funds and the interest-free advances.

What were the issues?

Whether the interest expenditure claimed by the assessee is disallowable when interest-free advances were made to related parties, despite the borrowed funds not being directly linked to these advances.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 40(1)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE

For Appellant: Shri G.V.N.Hari, AR

Hearing: 23.08.2023Pronounced: 29.08.2023

Per Shri Duvvuru RL Reddy, Judicial Member :

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No. ITBA/NFAC/S/250/2023- 24/1053339971(1), arising out of the assessment order passed by the Assessing Officer (AO) u/s 143(1) of the Income Tax Act, 1961 (in short “Act”) dated 06.12.2016 for the Assessment Y

The order continues below.

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