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2023 (6) TMI 1024 - AT - Income TaxDisallowance of expenses u/s 36(1)(iii) - non charging of interest on advanced amount - advance was paid from interest free fund which has related to assessee’s sundry creditors where assessee is advancing interest free loan - HELD THAT:- Actually, the total ‘interest free funds’ available with the assessee which comprises of interest free sundry creditors and other payables and which is also apparent from the balance sheet of the assessee and these are interest free funds available with the assessee, as the assessee has not to pay any interest on the amount due to the parties. The assessee utilized the interest free fund to advance/loan, to party. Assessee claimed that the entire amount was utilized from the non-interest-bearing fund. We respectfully relied on the orders which are duly relied by the ld. AR, are ITAT Chandigarh Bench in the case of M/s Gourav Malhotra & Co. [Supra] and the order of Hon’ble Apex Court in the case of Reliance Utility and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT]. Accordingly, the assessee’s payment for advance from non-interest-bearing fund is not attracted any interest. So, the assessee has not contravened the section 36(1)(iii) for payment of interest free advance. The issue was first time explained before the Bench. The appeal is remanded back to the ld. CIT(A) for further adjudication on basis of the observation of the bench indicated above. Appeal of assessee allowed for statistical purpose.
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