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2019 (1) TMI 94 - AT - Income TaxDisallowance of interest on unsecured loans - AO found that the assessee has extended a sum on which no interest was charged and further found that sum of ₹ 32.30 lacs was shown as advance in supplier - proportionate interest disallowance seeked by AO - Held that:- As find from the balance sheet of 31.03.2013 advance to suppliers was of ₹ 29 lacs. The same is ₹ 32.30 lacs on 31.03.2014. In my considered opinion advances to suppliers are given in the normal course of business and therefore not to be considered interest free loans and advances. To this extent find no reason for disallowing proportionate interest. Further find that assessee own capital is ₹ 31.17 lacs therefore, loan of ₹ 2.03 lacs can be safely concluded to be coming out of interest free funds available with the assessee. Therefore, direct the Assessing Officer to delete the disallowance of ₹ 44,45346/- the ground is allowed. While making ad-hoc disallowance the AO has not pointed out any specific defect in any bills/ vouchers submitted by the assessee. In my considered opinion without pointing out any defect in the books of account, the Assessing Officer cannot make ad-hoc disallowance accordingly direct the Assessing Officer to delete the addition of ₹ 349600/- and ₹ 30827/- this ground is also allowed. - decided in favour of assessee.
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