Case Law Details
ATS Infrastructure Ltd. Vs ACIT (ITAT Delhi)
The issue under consideration is whether the disallowance of Interest u/s 36(1)(iii) is justified in law?
In the present case, the assessee company has given interest free loans and advances to related party. The disallowance of interest expenses against these loans have been discussed in the assessment order passed for preceding A.Y. 2011- 2012. By following the same manner, the A.O, therefore, disallowed interest under section 36(1)(iii) of the I.T. Act, 1961.
ITAT states that, the A.O. on made the addition u/s 36(1)(iii) by following his Order for the A.Y. 2011-2012 without giving any independent findings. In A.Y. 2011-2012 the Ld. CIT(A) has allowed the claim of assessee and deleted the addition. Though in current appeal the Department has filed an appeal before the Tribunal, but, no ground have been raised on this issue. Copy of the grounds of appeal is also filed on record. These facts itself are sufficient to delete the addition. ITAT may further note that assessee has own sufficient funds to give advance to M/s. Prateek Resorts & Builders Pvt. Ltd., out of own funds. There was also an opening balance for the Assessee in preceding year, on which, addition has already been deleted. The assessee has also placed on record the correspondence between the parties to show that advance have been given for commercial expediency. It is well settled Law that when interest free funds are available to the assessee which were sufficient to made its investments, it would be presumed that the investments were made from the interest free funds available with the assessee. Considering the totality of the facts and circumstances of the case, ITAT do not find any justification to sustain the addition. Accordingly, set aside the Orders of the authorities below and delete the addition u/s 36(1)(iii). The appeal of assessee are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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