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2019 (5) TMI 2000 - ITAT AHMEDABADDisallowance of interest expenses - said interest related to borrowed fund, which were not used for business purpose - assessee has given interest free advances to its sister concern - HELD THAT:- We have also carefully considered the order passed by the Learned Tribunal for A.Y. 2010-11 & 2011-12 in assessee’s own case once an assessee demonstrated that on a particular date of accounting period it has availed interest free funds and it wants to characterize it as interest free advance out of this interest free fund, then the ld.AO cannot assume interest income by merely observing that loans were given before availability of interest free funds. Assessee has been showing excess interest free funds. Out of which it could be assumed that these advances were made. This plea of the assessee cannot be rejected merely by observing that loans were given before 1.4.2006. There is no logic in the stand point of the CIT(A). Every year is an independent assessment year and even if the assessee has been charging interest on the advances given by him, but after a particular date, it can stop charging interest by treating the advance as given from interest free funds. In the present case, the assessee has demonstrated that it is having sufficient interest free funds out of which the loans given even in earlier years can be characterized as given in the present year. Accordingly, we allow his ground of appeal and delete the disallowance. Assessee appeal allowed.
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