2018 (9) TMI 2077 - AT - Income Tax

Addition u/s 36(1)(iii) - excess interest paid over interest received - HELD THAT - The similar addition was in Assessment Year 2008-09 and 2009-10 2016 (5) TMI 1218 - ITAT MUMBAI and on appeal the order of ld. CIT(A) deleted the addition/ disallowance and on further appeal before Tribunal the order of the CIT(A) was sustained. The assessee also furnished the copy of order of Tribunal 2016 (5) TMI 1218 - ITAT MUMBAI before ld CIT(A). The ld. CIT(A) by following the order of Tribunal dismissed the appeal of Revenue. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance under section 36(1)(iii) of the Income Tax Act.

Analysis:
The appeal by Revenue was against the order of the ld. CIT(A) for Assessment Year 2010-11, arising from the assessment order under section 143(3) of the Act. The main issue was the disallowance of a significant amount under section 36(1)(iii) of the Income Tax Act. The ld. AR of the assessee argued that the ground of appeal raised by Revenue was in favor of the assessee, citing precedents from previous assessment years. The Assessing Officer noted interest payments exceeding interest received and loans availed by the assessee. Despite the assessee's explanation of having sufficient interest-free funds, the Assessing Officer disallowed a substantial amount under section 36(1)(iii). The ld. CIT(A) dismissed the appeal of Revenue, following the Tribunal's order in previous assessment years where similar disallowances were deleted.

In the judgment for Assessment Year 2008-09, the Tribunal held that the disallowance made by the Assessing Officer lacked basis and was not supported by scrutiny assessments. It was emphasized that interest expenditure incurred for earning income should be allowed under section 36(1)(iii) of the Act. The Tribunal upheld the ld. CIT(A)'s decision to delete the disallowance. Similarly, for Assessment Year 2009-10, the Tribunal followed the precedent set in the previous year and dismissed the addition made by the Assessing Officer under section 36(1)(iii).

The Tribunal, in the current case, considered the decisions of previous years and found no illegality or infirmity in the impugned order. The Tribunal noted that no contrary facts or decisions were presented to challenge the order. Consequently, the appeal of the Revenue was dismissed, affirming the decision of the ld. CIT(A) to delete the disallowance under section 36(1)(iii) for the Assessment Year 2010-11.