Case Law Details
CIT Vs Asian Peroxides Ltd. (Madras High Court)
The issue under consideration is whether disallowance made u/s 36(1)(iii) is to be allowed when the Assessee has diverted interest bearing funds to its sister concern without charging any interest?
High Court states that,the Assessing Authority has merely disallowance under Section 36(1)(iii) vide the afore-quoted portion from the Assessment order on the basis of Average Interest free loan and Interest bearing Secured Funds from the Assessee Company. The Assessing Authority has not gone into the aspect of the unpaid sale price by the Subsidiary Company. The said enquiry was necessary before making any disallowance under Section 36(1)(iii) the Act. Therefore, in our opinion, the matter deserves to be remanded to the Assessing Authority for holding an enquiry into this aspect of the matter and then consider the question of disallowance under Section 36(1)(iii) of the Act. Accordingly, HC set aside all the three orders of the three Authorities below for the Assessment Year 20012-2013 and direct the Assessing Authority to pass fresh orders in accordance with law after giving opportunity of hearing to the Assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
The Revenue has preferred these Appeals raising the following substantial questions of law under Section 260A of the Act for the Assessment Year 2012-2013:-
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