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2017 (1) TMI 1502 - AT - Income TaxAddition u/s 36(1)(iii) - Held that:- On perusing the provisions of Section 36(1)(iii) found any expenditure in nature of interest on borrowed capital shall be allowed as deduction provided it has been utilized for the purpose of business. We are of the opinion that the assessee could not satisfy with the correct allocation of interest and interest advance information and the Assessing Officer order also does not satisfy with the reasons except relying on the contention of the assessee. The Ld. TPO has also made adjustment as advance was provided to subsidiary company and these aspects are to be verified from the angle of commercial expediency, which the Assessing Officer has not made any enquiry or called for any documents from subsidiaries to prove that there exist a commercial expediency. Therefore, we are of the opinion, one more opportunity to be provided to the assessee to explain the commercial expediency of this transactions with the subsidiary company before the Assessing Officer and we remit the dispute of issue of interest disallowance made by the Assessing Officer on M/s. Prodapt Corporation Inc, USA, M/s. Prodapt Technology Holdings Pvt Ltd and M/s. Southern Group Industries Pvt. Ltd to the file of the Assessing Officer to verify and pass orders and the assessee should be provided opportunity of being heard before disposal of the order on merits. Non deduction of TDS - payment to the subsidiary company towards software development services - Held that:- Considering the facts and the payment made to subsidiary for software development services does not come into the purview of applicability of provisions of TDS Section 40(a)(ia) of the act and accordingly we following the decision of this coordinate Tribunal M/s. Financial Software & Systems (P) [2016 (6) TMI 889 - ITAT CHENNAI] direct the Assessing Officer to delete the addition and allow this ground of the assessee.
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