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2022 (2) TMI 573 - ITAT CHENNAIDisallowing interest claimed u/s. 36(1)iii) for giving interest free funds to sister concerns - HELD THAT:- For the interest bearing funds diverted towards interest free loans advanced to sister concerns the assessee explained that the assessee has cash accruals in the shape of depreciation and cash equivalent at the end of the year. According to him, this is sufficient to meet the interest free loans advanced to sister concerns and these are not out of interest bearing loan funds on which expenditure is being claimed. When these facts were confronted to ld. Senior DR, he could not controvert the factual situation. We noted that the assessee is able to explain that interest free loans advanced to sister concerns are not diverted out of interest bearing loans rather accrual of interest free funds, which is enough to meet out the same. Hence, we are of the view that this disallowance deserves to be deleted. We delete the disallowance and direct the AO accordingly. - Decided in favour of assessee.
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