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2022 (7) TMI 1152 - AT - Income TaxInterest disallowance computed at 12% in respect of financial transactions with M/s Om Kailash Cotton - HELD THAT:- As correctly noted by the Ld. CIT(A) in the appellate proceedings, the assessee has not been able to demonstrate that interest-free funds were available with the assessee during the year under consideration out of which interest-free advances had been given to M/s Om Kailash Cotton. Also, we note that Ld. CIT(Appeals) also observed specifically that the interest disallowance on account of financial transactions with M/s Om Kailash Cotton offered for taxation by the assessee is also not reliable for the reason that it has taken the opening balance of ₹ 5,24,388/- instead of ₹ 3,07,80,727/- for which no justification has been given. The argument of the assessee that the opening balance of ₹ 3,07,80,727/-should not be considered for disallowance of interest is also not acceptable since firstly, the assessee has been unable to demonstrate that a part of this relates to trading transactions with M/s Om Kailash Cotton despite being given several opportunities and secondly, since assessee has been unable to demonstrate with any supporting evidence that interest-free funds were utilised for giving advances to M/s Om Kailash Cotton, and since the assessee has claimed deduction of interest on the aforementioned interest bearing funds made available to M/s Om Kailash Cotton during the impugned assessment year, interest on the same is liable to disallowed. In the result, we are of the view, that in the instant set of facts, the assessee’s appeal is liable to be dismissed.
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