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2021 (3) TMI 119 - AT - Income TaxDisallowance of interest - AO had proceeded to work out the disallowance by concluding that the terms loans received by the assessee was used to advance the amounts and thereby assessee has utilized interest bearing fund for the purpose of advance - HELD THAT:- The summarized amount advanced to Vijuk Equipments Inc. as recorded in the assessment order and also reproduced in the order of CIT(A) reveal that assessee has made aggregating payment on various dates prior to 7.1.2011, being the date of disbursement of term loan of ₹ 329 lakhs. We thus find force in the contention of the Ld AR that the term loan of ₹ 329 lakhs could not have been utilized for making the advance to Vijuk Equipment Inc. In such a situation, we are of the view that no disallowance of interest could be made for the amounts advanced out of term loan of ₹ 329 lakhs. We therefore direct the AO to delete the addition on interest to that extent. As far as payment of ₹ 90.30 lakhs made to Vijuk Equipments Inc. on 09.03.2011 is concerned, before us Ld AR has fairly admitted that the term loan of ₹ 90.30 lakhs could have been said to be utilized for advancing the amount of ₹ 90.30 lacs to Vijuk Equipments Inc. In such a situation, we are of the view that to the extent of disallowance of interest on ₹ 90.30 lacs advanced calls for no interference. We therefore direct the disallowance of interest be restricted out of amount of ₹ 90.30 lakhs paid on 09.03.2011 from the term loan received by the assessee. Thus this ground of assessee is partly allowed.
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