Case Law Details
M/s. Essel Pro pack Ltd. Vs. DCIT (ITAT Mumbai)
Assesses has incurred expenses on behalf of certain foreign subsidiaries and Indian subsidiary and shown them under the head Advances Recoverable. The assessee has not made any non business advance to the these companies, but these amount represents various debits in the nature of sale of spares, royalty receivable, service charges and the expenses incurred on their behalf such as traveling expenses, establishment expenses, financial guarantees, communications expenses, etc. The assessee does not have system of charging interest on such debits of expenses incurred on their behalf. Such advances did not attract any adjustment in Transfer Pricing order also. However, the Ld. AO considered these debit balances as advances without interest and disallowed Rs. 1,07,54,398/- out of interest u/s 36(1)(iii). We do not find any merit for the dis allowance so made by the AO.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These are the cross appeals filed by assessee and revenue against the order of CIT(A)-12, Mumbai dated 04/08/2015 for A.Y.2009-10 in the matter of order passed u/s.143(3) of the IT Act.
2. The grievance of assessee relates to dis-allowance made u/s.14A and dis allowance of foreign exchange loss on forward contracts. Revenue is aggrieved for deleting dis allowance of interest u/s.36(1)(iii) on the plea that assessee was having sufficient own funds for investment in subsidiary company.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
