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2023 (1) TMI 162 - ITAT HYDERABADDisallowance of interest expenses - AO disallowed interest expenses on the ground that assessee did not respond to the query raised by him as to why the proportionate interest income on advance to M/s. Musaddilal Holdings Pvt.Ltd. has not been offered to tax - CIT(A) partly sustained the action of the AO - HELD THAT:- It is the submission of assessee that when he has filed the requisite details before the completion of the assessment on 28.05.2021 and the assessment order was passed on 27.05.2021, therefore, the observation of the AO that assessee has not filed the requisite details is incorrect and the CIT(A) also is incorrect in stating that the assessee has not filed any reply before the AO. It is also the submission of the ld.counsel for the assessee that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the AO that it has got sufficient funds to advance the amount for business exigency and therefore, no disallowance can be made under the provisions of law. We deem it proper to restore the issue to the file of the AO with a direction to examine the details already filed by the assessee vide letter and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Grounds raised by the assessee are accordingly allowed for statistical purposes.
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