Bagla Agro Limited Vs DCIT (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata bench, has allowed appeals filed by Bagla Agro Limited for the assessment years (AY) 2019-20 and 2021-22, deleting an addition made by the Assessing Officer (AO) and confirmed by the Commissioner of Income-tax (Appeals) [CIT(A)] regarding interest paid on a loan.
The case for AY 2021-22 involved an addition of ₹1,70,607 made by the AO. The AO had treated this amount, paid as interest on a loan from M/s Chordia Trade Credits Private Limited, as a bogus expenditure. The AO’s reasoning was based on information suggesting M/s Chordia Trade Credits Pvt. Ltd. was a shell company, included in a database by the Directorate of Income Tax (Investigation), Kolkata. Consequently, the interest payment was considered non-genuine and added back to the assessee’s income.
Bagla Agro Limited challenged this addition before the CIT(A). However, the CIT(A) upheld the AO’s order, stating that the AO had “rightly added the addition of non genuine business expenditure” and saw “no need to intervene” after examining the assessment order and the assessee’s submission.
Before the ITAT, the assessee contested the confirmation of this addition. The Tribunal reviewed the facts and found that the loan itself, from which the interest arose, had been taken by the assessee in earlier assessment years. Importantly, the ITAT noted that both the loan and the interest paid thereon had been accepted by the Revenue in those preceding assessment years.
