DCIT Vs Advant IT Park Pvt. Ltd. (ITAT Delhi)
The Delhi ITAT dismissed the Revenue’s appeal against the order of the CIT(A) deleting additions made in the assessment completed under Section 143(3) for AY 2022-23. The dispute related to three additions: notional interest on interest-free advances to a wholly owned subsidiary, ad-hoc disallowance of business expenditure, and addition of trade payables under Section 68.
The Assessing Officer had added ₹6.16 crore as deemed interest on an interest-free advance of ₹51.35 crore to the assessee’s wholly owned subsidiary, alleging that the assessee had incurred interest expenditure on borrowings while granting the advance without charging interest. The CIT(A) found that the advances had been made over several years for acquisition and development of land and related project activities connected with the subsidiary’s IT Park project. The documentary evidence, including allotment letters, lease deeds, bank records and project documents, established that the funds were deployed for business purposes. The CIT(A) further noted that no interest had accrued or been received during the relevant year, there was no material indicating diversion of funds for non-business purposes, and similar advances had not attracted such additions in earlier years. Holding that the advances were supported by commercial expediency and business nexus, the CIT(A) deleted the addition.
