United Builders Vs ACIT (ITAT Mumbai)
The Income Tax Appellate Tribunal Mumbai adjudicated an appeal concerning disallowance of interest expenditure under Section 69C of the Income-tax Act for assessment year 2015-16. The assessee, a partnership firm engaged in the business of builders and developers, had claimed interest expenditure of ₹25,07,683 on unsecured loans. The Assessing Officer disallowed the interest on the ground that the underlying unsecured loans were found to be non-genuine in assessment year 2013-14, as the identity, creditworthiness of lenders, and genuineness of transactions were not established. This disallowance was upheld by the CIT(A), noting that similar findings in assessment year 2013-14 had not been disturbed.
Before the Tribunal, the assessee contended that the appeal for assessment year 2013-14, which concerns the genuineness of the loans, is still pending before the CIT(A), and its outcome directly affects the present disallowance. It was submitted that since the loans were received in 2013-14 and only interest was claimed in the relevant year, the issue of interest disallowance is consequential to the determination of the earlier year.
The Tribunal, after considering submissions and reviewing the record, found merit in the contention that the issue of interest disallowance is dependent on the outcome of the appeal for assessment year 2013-14. Since the genuineness of the loans is yet to be finally determined, the disallowance of interest could not be conclusively adjudicated.
