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2018 (5) TMI 434 - ITAT KOLKATAAddition on account of diversion fund - amount of interest expense claimed by the assessee corresponding to the investment made in its sister concern was not eligible for deduction u/s. 36(1)(iii) - Held that:- In the instant case, the AO has alleged that assessee has diverted its interest bearing fund by giving non-interest bearing advances to its sister concerns. AO made the disallowance of interest expenditure as claimed by assessee corresponding to the interest free advance made by it to its sister concerns. AO was reversed by Ld. CIT(A) by observing that own fund of assessee exceeds the amount invested in its sister concerns. It is undisputed fact that the own fund of assessee exceeds the amount of investment made in sister concerns as discussed in the order of CIT-A. Therefore, the presumption can be inferred that the own fund has been used in making the investment in sister concern. None of the investments in sister concerns had been made by the assessee out of borrowed funds. The ld. DR has also not brought anything on record contrary to the finding of ld. CIT-A. Therefore, there is no reason to make disallowance of the interest expense. - Decided against revenue.
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