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2020 (8) TMI 97 - AT - Income TaxAddition being amount of sales tax advance paid - where such amount, which is not claimed as an expenditure by the assessee while preparing P&L A/c, then can any addition be made on such an entry? - HELD THAT:- We find no merit in the orders of the authorities below as the amount has only been shown as an advance and not claimed as an expenditure. Now, coming to the second stand of the AO even if the said amount was contingent liability, but in view of the provision of section 43B of the Act, such amount are duly allowable as expenditure in the year of payment. However, the same is not the case of the assessee and accordingly, we direct the Assessing Officer to delete the addition - Decided in favour of assessee. Disallowance of interest being interest payable on loan advanced to subsidiary M/s. Sagar Power Ltd. - HELD THAT:- From entries passed by the assessee in its books of accounts and details furnished reflects that in the account of interest on unsecured loans with “ICICI Bank”, the assessee is debiting the interest quarter-wise which is due to ICICI Bank and simultaneously crediting the said account being interest on loan given to M/s. Sagar Power Ltd. Entry to entry amount is debited & credited to the account. Assessee is not charging any interest due on the loan disbursed to the ICICI bank to the subsidiary company. The said interest is shown as recoverable from M/s. Sagar Power Ltd. & in the final analysis, no amount has been claimed as a deduction. In these facts and circumstances, there is no merit in making the aforesaid addition in the hands of the assessee on account of interest attributable to the loan raised from ICICI Bank for the so called benefit of the subsidiary. Similarly, the loan which has been shown as due to ICICI Bank is in turn being treated as advance to the subsidiary. On such advancement of loan to the subsidiary, there is no merit in making any disallowance on account of notional interest. - Decided in favour of the assessee. Difference in gross receipt of interest - AO difference in gross receipt of interest - HELD THAT:- Issue relating to the availment of loan from ICICI bank and its advancement to subsidiary M/s. Sagar Power Ltd. in the paras above. The assessee on the other hand has not claimed the expenditure of interest due to ICICI bank and has also not shown the interest received from M/s. Sagar Power Ltd., as it had set off the interest account i.e. interest receipt from subsidiary with the interest due to ICICI bank. In these facts and circumstances, we find there is no merit in the exercise carried out by the Assessing Officer. In case the interest income is added in the hands of the assessee then, the interest expenditure which is equivalent to the interest income earned should be debited and NIL income is to be assessed in the hands of the assessee. Ground of appeal raised by the assessee is allowed.
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